How the Bitcoin Went Missing

South Korean police have lost 22 Bitcoin—worth around $1.4 million—seized during a 2021 local exchange hack. The stolen funds remained undiscovered for four years, only coming to light during a nationwide audit prompted by another crypto disappearance.

Instead of storing the seized BTC in a fully police-controlled cold wallet, the coins were placed in a third-party wallet connected to the hacking case. Both the third party and the company official had access to the wallet’s seed phrase, while police had none.

Investigators found that the seed phrase was handed to an individual known as “Mr. Jeong” under a borrowing arrangement, allowing the coins to be withdrawn under unclear circumstances.

Investigation Reveals Protocol Failures

The Gyeonggi Northern Provincial Police Agency’s probe uncovered multiple breaches of standard procedures, which required all seized crypto to remain under strict police control.

Complicating the case, an investigator involved in the original exchange hack was convicted of bribery in August 2025 for accepting payments to bias the investigation.

The discovery of the missing funds came during a nationwide review after 320 BTC disappeared from the Gwangju District Prosecutors’ Office, highlighting systemic weaknesses in how South Korean authorities manage seized cryptocurrency.

Two individuals have now been arrested in connection with the missing Bitcoin as investigations continue.