- South Korean police arrest two over missing 22 BTC
- Seized bitcoin worth $1.5 million disappears from custody
- Cold wallet handling sparks scrutiny over digital asset controls
South Korean authorities have detained two individuals over the disappearance of 22 bitcoin from official custody, intensifying scrutiny around how seized digital assets are stored and managed. The arrests followed an internal review that uncovered the missing coins years after they were first confiscated.
According to local outlet JoongAng Ilbo, the Gyeonggi Northern Provincial Police Agency took the suspects into custody on Feb. 25. Investigators charged them with violating the Information and Communications Network Act. Authorities allege the pair leaked the bitcoin from a device held at Gangnam Police Station.
The missing assets were originally seized in November 2021. Officers had secured the funds during an investigation into the A Coin Foundation. At the time, the foundation reported the disappearance of 700 million units of its native token. Police confiscated 22 BTC as part of that probe.
However, officials only recently discovered that the bitcoin had vanished. At current market prices, the stash carries an estimated value of $1.5 million. Investigators have not confirmed whether they have recovered any portion of the funds.
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Discovery of Missing Bitcoin Triggers Internal Review
Authorities identified the discrepancy during a routine asset verification process. That review exposed gaps in how officers documented and monitored seized digital holdings. As a result, senior officials launched a formal investigation into potential misconduct.
Moreover, internal auditors examined transaction histories linked to the wallet. They traced suspicious transfers that allegedly moved the 22 BTC out of custody. Consequently, police expanded the probe to include individuals connected to the original 2021 case.
Investigators believe the delay in detection reflects weaknesses in oversight mechanisms. Digital assets require consistent monitoring to prevent unauthorized access. This incident has prompted calls for tighter reporting standards within law enforcement agencies.
Cold Wallet Handling Raises Chain of Custody Concerns
Court documents and local reports indicate that officers stored the seized bitcoin on a cold wallet provided by the A Coin Foundation itself. That decision has since drawn criticism. Instead of using a state-managed device, police relied on hardware supplied by the complainant in the case.
Authorities now suspect that individuals linked to the foundation accessed the wallet using its mnemonic recovery phrase. By doing so, they allegedly transferred the bitcoin without immediate detection. Investigators believe this lapse in custody controls enabled the leak.
Furthermore, the case has revived questions about digital asset management within law enforcement agencies. Proper custody procedures remain critical when handling cryptocurrencies. Any weakness in oversight can expose seized funds to internal or external interference.
Prior Bribery Conviction Deepens Institutional Fallout
The case also connects to earlier corruption findings involving the original investigation. The former senior superintendent who led the 2021 probe currently serves an 18-month prison sentence. A court convicted him in August 2024 on bribery charges tied to the A Coin Foundation.
Prosecutors found that foundation officials paid bribes to influence the hacking investigation. That conviction now adds another layer to the unfolding bitcoin leak case. Additionally, it places renewed pressure on authorities to rebuild public trust.
The arrests mark a significant step in addressing the disappearance of 22 BTC from police custody. As the investigation advances, the case underscores the operational risks surrounding seized digital assets and highlights the need for stricter custody controls within law enforcement.
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