Two people have been arrested in South Korea after police lost 22 seized Bitcoin now valued at about $1.4 million, with the funds missing for four years before being uncovered during a wider audit.
The Bitcoin was confiscated in November 2021 following a hack on a local exchange but was stored in a third-party cold wallet rather than one fully controlled by police, in breach of long-standing protocol.
Under official guidelines, any seized crypto assets must be secured in a cold wallet under full police control, yet investigators found the wallet used was owned by a third party linked to the hacking case who also had access to the seed phrase.
According to local reports, police themselves did not know the seed phrase, and an official from a company with access to it later handed the phrase to an individual identified as “Mr. Jeong” as part of a borrowing arrangement.
The Gyeonggi Northern Provincial Police Agency has arrested two individuals in connection with the theft as it continues to investigate how the funds were transferred under what authorities described as unusual circumstances.
Complicating the case further, an investigator involved in the original exchange hacking probe was sentenced in August 2025 on bribery charges after being offered money in exchange for conducting a favourable investigation.
The missing funds were only discovered after a nationwide audit prompted by the separate disappearance of 320 BTC from the Gwangju District Prosecutors’ Office, highlighting broader weaknesses in how seized digital assets have been managed by authorities.
At the time of reporting, Bitcoin price was $67,627.74.