South Korean Police Lose $1.4M in Seized Bitcoin, Two Suspects in Custody
Authorities confiscated the cryptocurrency in 2021, but failed to secure it properly in a third-party wallet, allowing the theft to remain undetected for a four-year period.
Authorities in South Korea have taken two individuals into custody in connection with an incident where law enforcement officials lost 22 confiscated Bitcoin, currently valued at $1.4 million, following the storage of these digital assets in a cold wallet controlled by an external party.
Initial reports about the missing 22 Bitcoin (BTC) surfaced in local news outlets during the first part of February, with additional details about the incident emerging as the Gyeonggi Northern Provincial Police Agency pursues its ongoing investigation into this matter.
Based on a Wednesday report from Dong-A Ilbo, a South Korean news publication, investigators discovered that several violations of established procedures ultimately resulted in the theft of these funds.
According to the station's established protocol, which had been operational for several years prior, all confiscated cryptocurrency must be kept in a cold wallet that remains under the complete control of law enforcement authorities.
Nevertheless, following the seizure of the BTC through voluntary submission in the aftermath of a hack targeting a domestic exchange in November 2021, the cryptocurrency was instead placed in a cold-wallet belonging to a third-party individual connected to the hacking investigation, who maintained access to the wallet's seed phrase.
Compounding the situation, law enforcement officials themselves reportedly possessed no knowledge of what the seed phrase actually was.
Funds were pulled in strange circumstances
Authorities continue their investigation into the circumstances surrounding how the funds came to be stolen.
Nevertheless, according to the South Korean news source, a representative from a company possessing access to the seed phrase transferred it to a person identified as "Mr. Jeong" as part of a loan arrangement between the pair.
To date, the Gyeonggi Northern Provincial Police Agency has apprehended two people in relation to this case.
Further complicating the situation, an investigator who worked on the original case connected to the compromised exchange from which the confiscated assets originated received a sentence in August 2025 on bribery-related charges. Authorities determined that he had accepted monetary payments in return for conducting a favorable investigation.
A period of four years elapsed before officials became aware that the funds had disappeared, with the issue being identified following a countrywide audit conducted in response to the loss of 320 BTC in an unrelated incident at the Gwangju District Prosecutors' Office.