South Korean prosecutors are investigating how a massive stash of Bitcoin, seized during a criminal case, mysteriously vanished while under official custody.
Key Takeaways
- South Korean authorities lost Bitcoin worth approximately $48 million that had been seized in a criminal investigation.
- Investigators believe the loss occurred via a phishing attack, likely due to weak internal security measures.
- The stolen Bitcoin had been stored on a USB device, and the wallet password was reportedly leaked to a third party.
- The incident raises serious concerns about government asset management practices in handling digital currencies.
What Happened?
Prosecutors from South Korea’s Gwangju District Office are currently investigating the disappearance of seized Bitcoin worth an estimated 70 billion won or about $48 million. The coins, originally confiscated in an illegal gambling case, were believed to have been stolen during official storage via a phishing attack.
JUST IN: 🇰🇷 South Korean prosecutors search for “lost” Bitcoin
— Bitcoin Archive (@BitcoinArchive) January 22, 2026
– Prosecutors say a “significant” amount of BTC was lost while in state custody
– Loss likely occurred mid-2025, possibly via phishing
– Authorities refuse to disclose how much Bitcoin is missing pic.twitter.com/BexowaFnlX
Poor Storage, Phishing, and a Major Security Breach
The scandal began to unfold after a routine inspection revealed that a portion of the seized cryptocurrency had gone missing. Early reports suggest that the digital assets were being stored on a portable USB drive, a highly insecure method compared to professional digital custody systems. During a regular audit, it was discovered that the wallet password had been exposed to an external party, which allowed unauthorized access and transfer of the funds.
While the Gwangju District Prosecutors’ Office has not confirmed the exact amount lost, local media reports and internal audits estimate the loss at around $48 million worth of Bitcoin at the time of the breach.
A spokesperson for the prosecutor’s office told Yonhap News:
They declined to provide additional details.
A Broader Problem for Crypto Security
This case highlights how even government agencies are vulnerable to social engineering attacks, especially in the fast-evolving and technically complex world of cryptocurrency.
Phishing attacks in the crypto space often involve scammers impersonating trusted platforms or wallets to trick victims into handing over sensitive credentials. Unlike traditional hacks, these schemes exploit human error and institutional gaps, rather than blockchain vulnerabilities.
According to Chainalysis, phishing and impersonation scams surged dramatically in 2025, draining $17 billion from victims globally. Many of these scams have grown more advanced, fueled by AI-powered phishing tools, deepfake technologies, and organized laundering operations.
The Gwangju prosecutors are no strangers to large crypto seizures. In 2024, the office led the confiscation of 170 billion won (about $127 million) in Bitcoin tied to a separate illegal gambling case. However, this incident may now overshadow those achievements by exposing fundamental weaknesses in asset management protocols.
CoinLaw’s Takeaway
This story blows my mind, honestly. In my experience covering crypto security, I’ve seen plenty of high-profile thefts, but seeing a government office lose millions in Bitcoin due to poor handling is on another level. Storing such massive value on a USB without airtight controls is a recipe for disaster. It’s not just about tech. This is about institutional discipline and digital literacy. If governments want to regulate crypto seriously, they need to up their game in safeguarding it too.
