Audit Fails as 22 Seized Bitcoins Vanish from Seoul Police Custody

• The Bitcoin was handed over to the Gangnam Police Station in Seoul back in November 2021.
• 22 BTC had been moved out of the wallet, even though the physical device was still there.
• Last year, prosecutors in Gwangju realized that 320 Bitcoins had vanished from custody.

South Korean authorities have reported that 22 Bitcoins (worth about $1.5 million), seized in a 2021 criminal case and kept in a secure offline wallet, have disappeared.

The Bitcoin was handed over to the Gangnam Police Station in Seoul back in November 2021 as evidence and stored on a USB-type cold wallet.

A national review of how police and prosecutors keep crypto (started after another big Bitcoin loss) found that these 22 BTC had been moved out of the wallet without authorization, even though the physical device was still there.

The Gyeonggi Northern Provincial Police Agency is now investigating how this happened and whether it was an inside job or due to weak procedures.

South Korean authorities say no one noticed the Bitcoin was gone for years because the original case tied to it was dormant, and it only came to light during the recent audit.

Related: Crypto Crackdown: South Korea Announces Market Manipulation Investigation

Not the first Bitcoin loss

This case follows a much bigger Bitcoin loss by another government office. Back in August last year, the Gwangju District Prosecutors’ Office realized that 320 Bitcoins (at the time, worth roughly $37 million) had vanished from their custody.

Prosecutors said BTC was stolen through a phishing attack, where employees allegedly typed their wallet information into a fake website, giving hackers access to steal the funds.

Officials said they haven’t found proof that anyone on the inside was involved, but they’ve started their own investigation into personnel and security measures, following the incident.

Taken together, these two cases raise serious concerns about how well South Korean key state institutions are protecting the crypto in their care.

South Korea has strengthened its laws to allow authorities to seize crypto. The Supreme Court ruled that Bitcoin on exchanges can be taken as part of criminal cases, treating it like any other valuable property.

However, having the power to seize crypto doesn’t mean it will be stored safely, and these cases show there’s a big gap in how it’s protected once it’s in government hands.

Now, such incidents could push lawmakers and prosecutors to introduce stricter rules for handling seized crypto, like regular checks or requiring multiple approvals before any Bitcoin can be moved.

Related: South Korea Cracks Down on Crypto Drug Networks