South Korean Prosecutors Probe Disappearance of Seized Bitcoin

South Korean prosecutors are investigating the disappearance of a significant amount of bitcoin seized in a criminal case. The Gwangju District Prosecutors' Office discovered the loss during a routine internal review. The incident is believed to have occurred around the middle of last year.

The loss was flagged during a routine internal review, with phishing cited as a likely cause. Prosecutors declined to confirm the size or valuation of the missing holdings. They stated the investigation is ongoing, and further details cannot be shared at this time.

South Korea has previously handled large-scale crypto seizure cases and has an established legal framework for confiscating digital assets. The institutionalization of bitcoin confiscation in South Korea dates back to 2018. A landmark Supreme Court ruling enabled the state to treat cryptocurrencies as intangible assets with property value.

Why Did This Happen?

Phishing incidents are cited as the likely cause of the bitcoin disappearance. The Gwangju District Prosecutors' Office has faced challenges in securely storing seized digital assets. Internal sources estimate the loss at 70 billion won ($48 million), with the incident occurring in the summer of 2025.

Staff accidentally accessed a fraudulent website while checking on seized Bitcoin holdings. Security practices such as storing passwords on USB drives and not using multisig wallets are seen as below standard industry protocols.

What Is the Legal Framework for Confiscation?

The 2018 Supreme Court ruling provided the legal mechanism for the state to treat digital tokens as 'evidence or items subject to confiscation.' This ruling allowed for the seizure of 191 BTC from a convicted child pornography website operator, valued at approximately $2.3 million at the time.

Further expanding this reach, the Supreme Court issued a new ruling in December last year. It confirmed that bitcoin held on centralized exchanges such as Upbit and Bithumb is also subject to seizure. The court ruled that bitcoin constitutes electronic information with independent economic value and is therefore subject to seizure by investigative authorities.

What Are the Broader Implications?

This incident highlights the ongoing challenges in securely managing digital assets. 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.

South Korea continues to develop its broader crypto regulatory framework. Plans for spot crypto ETFs are part of this development. Over 16 million South Koreans hold crypto accounts at major domestic exchanges, representing roughly one-third of the country's population.

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.