In a twist that reads more like a dark comedy than a procedural drama, police officers at Seoul’s Gangnam Police Station were caught mishandling seized Bitcoin. They didn’t just misplace a password, they actually handed the keys to a thief.
This error resulted in the loss of $1.4 million in Bitcoin, sparking an investigation that has now led to arrests.
In 2021, officers from the Gangnam Police Station seized 22 Bitcoins from a company involved in a hacking case. At current prices, this stash is worth approximately $1.4 million.
Standard procedure states that seized cryptocurrencies must be moved to a secure cold wallet controlled only by the police. The National Police Agency even has specific guidelines recommending that assets be stored in a “separately installed safe” on a hard wallet managed by the investigating agency.
The Gangnam officers ignored him. Instead, they let the funds stay in a wallet managed by a third-party company. Worse still, the police did not even have the seed phrase, the master password required to access the funds. They essentially seized a safe but let a stranger keep the combination.
As expected, the funds disappeared. In 2022, an individual identified as “Jeong,” who had access to the wallet’s passphrase, moved Bitcoin. Police only realized the money was missing this year, almost two years later, during an independent audit by the Gwangju District Prosecutor’s Office.
According to local media, a North Gyeonggi Provincial Police official said: “We are investigating the circumstances surrounding the leak of the virtual assets and, as the investigation is still ongoing, we cannot confirm any details. »
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A custody nightmare? A systemic failure?
The South Korean government seized a Bitcoin wallet.
Then, not realizing what they were doing, they shared photos revealing the wallet’s seed phrase.
They ended up losing the seized goods #Bitcoin once again.
pic.twitter.com/OvSNuzvhsq
– Ferré (@FerreWeb3) February 27, 2026
Reports suggest the failure to secure the keys may not be an accident. A former officer of the original investigation team has already been charged with corruption, with allegations that the third-party company offered bribes to have the investigation go in their favor.
Likewise, breaches of trust have been exposed in the past, when a cryptocurrency CEO was convicted for running a massive Ponzi scheme. Whether it’s a CEO or a police officer, if a human being can be bribed or careless, your funds are at risk.
Notably, this comes just after South Korean regulators were criticized for missing a loophole that led to a $43 billion accounting error at the Bithumb exchange. The gap between the relentless regulatory crackdown on traders and the botched operational security of regulators themselves is becoming impossible to ignore.
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What This Means for You: The Lesson in Bitcoin Self-Custody
Self-care carries its own risks. This prevents remote theft, but the physical threats are real. Just look at the recent key attack against a Binance employee in France.
Two suspects, including “Jeong”, were arrested by the North Gyeonggi Provincial Police. The investigation is now focusing on exactly how the Bitcoin was leaked and whether other agents were complicit in the negligence or corruption.
For the South Korean government, this is a humiliating wake-up call. We expect strict new protocols to be applied at all police stations dealing with digital evidence.
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Key takeaways
- South Korean police lost $1.4 million in seized Bitcoin because they allowed a third party to control private keys.
- The incident highlights a critical failure in operational security, compounded by allegations of corruption within the investigation team.
- This serves as a reminder to practice self-care; never rely on third parties to secure your assets in the long term.
The post South Korean Police Mishandled $1.4M in Bitcoin: Suspects Arrested appeared first on 99Bitcoins.
