Suspects Arrested After South Korean Police Mishandle $1.4 Million in Bitcoin: Report
Police officers at Seoul’s Gangnam Police Station failed to follow asset custody protocols after seizing 22 Bitcoin from a hacked company in 2021, resulting in a loss of over $1.4 million. Instead of storing the Bitcoin in a secure, police-controlled cold wallet as required, officers kept the funds in a third-party wallet without access to the seed phrase. In 2022, the third-party firm controlling the wallet loaned the Bitcoin to an individual named “Jeong,” who also received the wallet’s secret phrase. The missing funds were only discovered in 2024 during a broader review into lost Bitcoin. Two suspects have since been arrested, and police are investigating how the funds were misappropriated. The incident comes amid wider scrutiny of South Korea’s financial oversight, highlighted by a separate case in which exchange Bithumb mistakenly distributed $135 million worth of Bitcoin to users due to a system error. Corruption is suspected in the police mishandling, with a team member previously indicted on bribery charges and the implicated firm alleged to have offered bribes to influence the investigation.
