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South Korean authorities have launched a formal investigation after 22 Bitcoin worth approximately ₩2.1 billion vanished from the Gangnam Police Station’s custody, where the assets had been held since a 2021 criminal investigation.
The disappearance was discovered during a nationwide audit triggered by a separate case in which 320 Bitcoin went missing from the Gwangju District Prosecutors’ Office last year.
The Gangnam Bitcoin theft has intensified scrutiny over crypto storage practices inside South Korea’s justice system, particularly after a separate case last year in which 320 Bitcoin went missing from the Gwangju District Prosecutors’ Office.
Authorities said the 22 Bitcoin were voluntarily surrendered by suspects during a 2021 probe and had remained in police custody since that time. However, during an internal review prompted by the earlier Gwangju loss, officials discovered the funds had been transferred out of the designated storage wallet without authorization.
The Gangnam Bitcoin theft is particularly troubling because the physical cold wallet device — a USB-style hardware unit used to store private keys offline — remains in the possession of the Gangnam Police Station.
That detail suggests the assets were moved digitally without removal of the hardware itself, raising serious questions about key management and internal access controls.
Investigators believe the private keys tied to the wallet may have been compromised or accessed improperly, allowing the transfer of the funds without any visible tampering with the device.
The Gyeonggi Northern Provincial Police Agency has initiated a formal inquiry into the Gangnam Bitcoin theft, focusing on how the coins were moved and whether internal personnel played any role.
So far, no officer or staff member has been publicly accused of criminal involvement. However, officials confirmed they are reviewing access logs, custody procedures, and transaction histories connected to the missing funds.
“We are conducting a thorough internal investigation into the transfer process and custody management,” a police official said in a statement regarding the Gangnam Bitcoin theft. “All relevant digital records are being examined.”
Blockchain transaction data is reportedly under review as authorities attempt to trace where the Bitcoin were sent and whether they can be frozen or recovered.
The Gangnam Bitcoin theft follows a similar high-profile incident in Gwangju, where 320 seized Bitcoin disappeared from prosecutorial custody in 2025. That earlier case sparked national debate over whether law enforcement agencies are equipped to securely manage virtual assets.
Crypto custody differs fundamentally from holding physical evidence or fiat currency. Access to private keys effectively grants full control over digital assets, meaning procedural weaknesses — even without physical theft — can result in irreversible losses.
Security experts note that best practices typically require multi-signature authorization, segregated key storage, and strict audit trails. Any lapse in these controls can create vulnerabilities.
The Gangnam Bitcoin theft now raises questions about whether such safeguards were fully implemented or consistently followed.
Authorities have not disclosed whether any of the missing Bitcoin tied to the Gangnam Bitcoin theft have been successfully traced or frozen.
While blockchain transactions are publicly recorded, recovering stolen cryptocurrency often depends on identifying the recipient wallet and coordinating with exchanges if the assets are converted into fiat currency.
If the Bitcoin were moved to self-custody wallets beyond centralized platforms, recovery may prove significantly more difficult.
Investigators are reportedly analyzing blockchain data to map the transaction path, a process that can take weeks or months depending on the complexity of transfers.
The repeated losses have prompted calls for stronger centralized oversight of seized digital assets in South Korea. Some legal analysts argue that specialized crypto custody units or partnerships with regulated institutional custodians may be necessary.
The Gangnam Bitcoin theft underscores a broader global challenge: as governments increasingly seize cryptocurrencies in criminal investigations, they must also develop robust systems to store and manage those holdings securely.
Digital assets now represent billions of dollars in potential evidence and restitution funds worldwide. Mishandling such assets not only damages public trust but can also expose agencies to liability.
For now, the focus remains on determining how the Gangnam Bitcoin theft occurred and whether the missing 22 BTC can be located.
Police officials say the investigation will examine internal wallet key management procedures in detail, including who had access credentials and how authorization was documented.
The outcome of the probe could shape future national policy on crypto evidence handling. If systemic weaknesses are uncovered, reforms may follow swiftly.
In the meantime, the Gangnam Bitcoin theft stands as a cautionary episode for law enforcement agencies navigating the complex intersection of criminal justice and blockchain technology.
As digital assets continue to feature prominently in financial crime cases, authorities face a stark reality: securing seized cryptocurrency demands the same sophistication as investigating it.
