In a shocking development, 22 Bitcoin seized by the Gangnam Police Station in Seoul have reportedly gone missing following an internal audit. This incident raises significant concerns about asset management practices within law enforcement agencies.
The lost funds, valued at approximately $1.5 million, were originally submitted as evidence in a case from November 2021 that was later suspended. Stored on a USB-based cold wallet, the Bitcoin was supposed to remain secure and offline, preventing unauthorized access. However, blockchain records indicate that the assets were transferred to an external wallet, despite the physical device remaining in police possession.
This breach remained undetected for years, primarily due to the case”s inactive status. It was only uncovered during a nationwide review initiated by the National Police Agency, which was prompted by a previous incident in August 2025 where 320 Bitcoin were lost from the Gwangju District Prosecutors” Office due to phishing-related issues.
The Gyeonggi Northern Provincial Police Agency is now conducting an internal investigation to assess the timing of the transfer, access controls, and the possible involvement of authorized personnel in this case. The findings underscore a troubling trend regarding the management of digital assets seized by law enforcement.
Cold wallets are designed to protect cryptocurrencies from online threats by keeping private keys offline. Nevertheless, they are not immune to operational vulnerabilities. Issues such as compromised seed phrase documentation, inadequate access controls, and insufficient multi-signature safeguards can lead to significant risks.
The incidents in South Korea highlight a shift in custody risks from external cyber threats to internal procedural failures. As authorities tighten their grip on digital asset regulations, the need for stringent management protocols is becoming increasingly evident.
In January 2026, a ruling by South Korea”s Supreme Court recognized Bitcoin as a “object of seizure” under the Criminal Procedure Act, highlighting its tradability and economic value. This legal acknowledgment elevates expectations for secure handling and management of cryptocurrency assets.
The ongoing custody issues raise critical questions about the operational integrity of public-sector crypto custody frameworks. As unauthorized transfers can go unnoticed for extended periods in dormant cases, the potential for insider threats looms larger than ever.
Efforts to recover the missing Bitcoin are uncertain, as once transferred, these assets may be obscured through mixers or cross-chain transactions, complicating tracing efforts. This situation emphasizes the urgent need for standardized practices across law enforcement agencies to safeguard digital assets.
The recent incidents risk undermining South Korea”s reputation as a jurisdiction with robust oversight of digital assets, as authorities face increasing scrutiny over their management of seized cryptocurrencies.
