Investigation into Missing Bitcoin
An investigation has been launched by the Gwangju District Prosecutors’ Office into the loss of Bitcoin that was previously in government custody. Reports indicate that a number of Bitcoins went missing during the management and storage process, an event believed to have taken place in mid-2025, as revealed by internal assessments. Preliminary investigations suggest that a phishing scheme, rather than a breach of government computer systems, led to the loss of these digital assets.
Details of the Incident
Details that have emerged indicate that officials had stored sensitive private key passwords on a portable USB drive. During a routine check, an employee allegedly accessed a counterfeit website, inadvertently exposing these credentials to unauthorized parties. This breach resulted in the irreversible transfer of the Bitcoin once the keys were compromised, leaving no feasible way for recovery.
Estimated Financial Impact
While officials have not publicly confirmed the specific amount of Bitcoin that has gone missing, estimates from local media and internal sources suggest it could be worth tens of billions of won, translating to nearly $48 million to $49 million.
Ongoing Investigation and Legal Context
The Gwangju District Prosecutors’ Office has stated that their internal investigation is ongoing but has refrained from providing details about the scope of the loss or any changes to operational protocols, citing the active nature of their inquiry. So far, no information has been made available regarding any disciplinary measures or modifications to the custody methods that were in place.
This case comes on the heels of a ruling by the South Korean Supreme Court on January 8, 2026, which affirmed that Bitcoin held on centralized exchanges such as Upbit and Bithumb qualifies as “seizable property” under the Criminal Procedure Act. This ruling builds on prior decisions from 2018 and 2021 that acknowledged the economic significance of cryptocurrencies as intangible property, thus broadening the government’s capacity to confiscate digital assets in criminal investigations.
Concerns and Industry Insights
This incident raises significant concerns about the preparedness of government entities to handle digital assets, particularly in relation to security measures necessary for managing cryptocurrency. Industry experts emphasize that effective custody of digital currencies demands rigorous operational security, specialized key management, and environments that are distinct from routine computing practices. The situation also underscores the ongoing challenges within South Korea’s evolving digital asset legal framework as the country seeks to establish a more robust approach to cryptocurrency regulation.
