South Korean Prosecutors Lose $48 Million in Seized Bitcoin to Phishing Scam

South Korean prosecutors lost a significant amount of seized Bitcoin BTC $89 768 24h volatility: 1.2% Market cap: $1.80 T Vol. 24h: $53.30 B to a phishing attack, with internal sources estimating losses around 70 billion won, equivalent to roughly $48 million.

The Gwangju District Prosecutors’ Office discovered the loss during a routine inspection of confiscated crypto assets. The incident occurred in the summer of 2025.

Staff accidentally accessed a fraudulent website while checking on seized Bitcoin holdings, and the office had stored Bitcoin-related passwords on USB drives, according to an Ohmynews exclusive.

The USB storage practice falls below standard industry protocols such as keeping credentials offline or requiring multiple approvals (multisig wallets) to move funds.

A prosecutor official independently confirmed the Bitcoin loss is factual but stated the office cannot publicly disclose the exact damage amount or coin quantity.

Prosecutors are taking recovery measures, though recovery is generally considered difficult once phished cryptocurrency moves to external wallets.

Legal Context

Two weeks before the loss became public, South Korea’s Supreme Court ruling, issued in December and reported publicly on Jan. 9, established that Bitcoin held on cryptocurrency exchanges can be legally seized under the Criminal Procedure Act.

The case involved 55.6 BTC worth approximately 600 million won seized from a money laundering suspect. The ruling comes as South Korea develops its broader crypto regulatory framework, including plans for spot crypto ETFs.

This is not the first Bitcoin controversy involving Gwangju authorities. In November 2021, 1,476 BTC disappeared during a police seizure operation from a gambling site.

Litigation over that matter remains pending before the Supreme Court. The current phishing incident is a separate case involving prosecutors rather than police.

Broader Security Trends

The prosecutor incident follows a pattern of crypto security challenges affecting institutions globally.

Ledger, a company that makes secure devices for storing cryptocurrency, recently disclosed another customer data breach involving its third-party payment processor.

Scam and phishing-related losses in the crypto sector tracked by PeckShield reached $1.37 billion in 2025, a 64% increase from the prior year.

Over 16 million South Koreans hold crypto accounts at major domestic exchanges, representing roughly one-third of the country’s population.

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