Simply put
- Authorities in South Korea have lost access to 22 Bitcoins valued at approximately $1.4 million.
- Officers at the Gangnam Police Station were meant to store the seized Bitcoins in their own cold wallets but instead entrusted a third party with their management.
- Years later, it became clear that the Bitcoins had been stolen, leading to the arrest of two suspects in the case.
In Seoul, police at the Gangnam Police Station did not follow proper virtual currency storage protocols, resulting in significant losses, exceeding $1.4 million in Bitcoin. The situation came to light through local media reports, with two suspects arrested related to the missing Bitcoins.
Back in 2021, after confiscating the 22 Bitcoins from a company that had been hacked, the police should have securely stored the assets in offline wallets. However, they allowed a third party to store them and did not possess the necessary seed phrase to access the wallet.
As outlined in their guidelines, the National Police Agency recommends transferring confiscated crypto assets to a hard wallet maintained by the investigating agency, storing them in a secure location.
In 2022, when a company that borrowed Bitcoin from an individual named “Jeong” had access to the wallet’s secret phrase, the police lost control of the funds due to their lack of access.
The missing Bitcoins only came to light this year. An investigation by the Gwangju District Public Prosecutor’s Office revealed that 320 Bitcoins, worth around $21 million, were missing in a separate case.
The Gyeonggi Northern Regional Police Agency has arrested two individuals and is currently investigating how the 22 Bitcoins disappeared from the Gangnam Police Station.
A police official mentioned that they are probing into the exact details surrounding the leak of the Bitcoins.
Ongoing investigations have revealed past misconduct, including members of the original hacking investigation team being indicted on bribery charges last year, with the involved third-party company allegedly offering bribes for favorable investigation outcomes.
Increased scrutiny has been placed on South Korean financial regulators following the failure of a company to identify an internal issue that resulted in a misdistribution of $43 billion in Bitcoin at the cryptocurrency exchange Bithumb earlier this month.
Instead of transferring a small promotional amount of 2,000 Korean won (about $1.40) to users, the exchange accidentally transferred 2,000 Bitcoins (around $135 million at current prices) to multiple users.
