South Korean Prosecutors Lose Seized Bitcoin, Decline to Disclose Details
The Gwangju District Prosecutor’s Office in South Korea lost a significant amount of Bitcoin seized during a criminal investigation, according to several local media outlets on January 22.
The case highlights a critical gap in how law enforcement handles the custody of digital assets.
Phishing attack suspected
The prosecution recently discovered that the Bitcoin held had disappeared. The loss is believed to have occurred around mid-2025. Investigators suspect the office fell victim to a phishing attack after accidentally accessing a fraudulent website during a routine inspection of seized property.
Prosecutors declined to confirm the exact amount lost. However, sources suggest that figure could reach tens of millions of dollars. A prosecutorial official told local media that internal estimates put the loss at around 70 billion won ($48 million).
“We are conducting an investigation to trace the circumstances of the loss and the location of the property,” said a prosecutor, refusing to provide further details.
Questions regarding cryptographic custody protocols
The incident raises fundamental questions about how law enforcement handles seized cryptocurrencies.
The first concern is whether prosecutors followed proper seizure procedures. If prosecutors simply confiscated a USB device containing wallet information without transferring the Bitcoin to a separate custodial wallet, the original owner could potentially withdraw the assets using a backup private key stored elsewhere. In such cases, the entry would be incomplete from the start.
The portfolio creation environment is also important. If a new custodial wallet was created on a computer connected to the Internet, the private keys may have been exposed at the time of generation. Standard security practices require creating wallets in an isolated environment, completely isolated from any network connections.
Private key storage presents another vulnerability. Keeping keys on network-connected devices or cloud storage creates significant hacking risks. The correct approach is to record the keys on a physical medium, such as paper, and store them somewhere completely disconnected from the Internet.
Access control is just as crucial. Private keys can be copied in seconds if someone gains even brief access. The fact that officials allegedly accessed a fraudulent website during a routine check suggests gaps in internal security training and access management protocols.
Broader Implications for Law Enforcement
This case highlights a growing challenge for authorities around the world. As cryptocurrencies become increasingly involved in criminal cases, law enforcement must develop robust custody solutions that meet security standards for the assets they manage.
Traditional evidence storage protocols do not translate directly into digital assets. Unlike physical evidence locked in a secure room, cryptocurrency requires active security measures to prevent unauthorized transfers.
The Korean prosecutor’s office did not reveal whether it followed established guidelines for custody of cryptocurrencies or what security measures were in place. The ongoing investigation could reveal systemic vulnerabilities that extend beyond this single incident.
For now, this case serves as a cautionary example of what can go wrong when conventional institutions manage unconventional assets without adequate preparation.
Read original story South Korean prosecutors lose seized Bitcoin, refuse to release details by Oihyun Kim at beincrypto.com
