Seoul | South Korean prosecutors have launched an internal investigation after a significant quantity of bitcoin seized in a criminal case allegedly went missing while under official custody, in what is suspected to be a phishing-related theft.
According to local media reports, the incident came to light following an internal audit in the Gwangju District, which revealed discrepancies in the management of confiscated digital assets. Preliminary findings suggest the seized cryptocurrency may have been siphoned off during the storage or administrative handling process, possibly after officials were targeted through a phishing attack.
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Authorities have confirmed the probe but declined to disclose specific details, citing the sensitivity of the investigation. Officials said efforts are underway to establish how the digital assets were compromised and to trace the current whereabouts of the missing bitcoin.
The case marks a rare instance where a government agency itself has fallen victim to crypto-related fraud, highlighting the growing risks associated with managing digital currencies even within regulated state systems. While cryptocurrency thefts and phishing scams have long plagued individual investors and private exchanges, the latest episode underscores that public institutions are not immune to such threats.
Investigators are examining whether access credentials, private keys or recovery phrases linked to the seized assets were exposed after officials were deceived by impersonation attempts. Phishing attacks typically involve fraudsters posing as trusted platforms, service providers or internal administrators to trick victims into revealing sensitive information, allowing attackers to gain irreversible access to crypto wallets.
Unlike conventional financial assets, cryptocurrencies are decentralised and transactions cannot be reversed once executed, making any lapse in security potentially catastrophic. Experts note that secure custody of digital assets requires specialised infrastructure, multi-layer authentication systems and strict operational controls—areas where many agencies are still adapting.
The South Korean case comes amid a sharp global rise in crypto-related fraud. Industry estimates indicate that scams and fraudulent activities siphoned off approximately $17 billion from victims worldwide in 2025, driven largely by an explosive surge in impersonation and phishing schemes.
Analysts say advances in artificial intelligence have further amplified the threat. AI-enabled attacks, including deepfake communications and automated phishing campaigns, have become significantly more profitable than traditional scam methods. Such tools allow criminal networks to scale operations rapidly, often targeting institutions as well as individuals.
Cybersecurity specialists warn that government agencies handling seized digital assets face unique vulnerabilities. Unlike banks, many public offices lack dedicated crypto custody frameworks, relying instead on ad hoc storage practices that may expose wallets to social engineering attacks.
The investigation is also expected to prompt a broader review of how confiscated cryptocurrencies are handled across South Korea’s law enforcement and judicial systems. Officials are assessing whether additional safeguards, external audits and specialised training are needed to prevent similar incidents in the future.
South Korea has been at the forefront of cryptocurrency regulation in Asia, with strict compliance norms for exchanges and investors. However, the latest breach highlights a regulatory gap when it comes to state-managed digital assets seized during criminal investigations.
As the probe continues, authorities are expected to clarify whether the loss resulted from human error, procedural lapses or a coordinated cyberattack. The outcome could have implications for future policy on digital asset custody, not only in South Korea but also for governments worldwide grappling with the challenges of policing an increasingly digital financial ecosystem.
About the author — Suvedita Nath is a science student with a growing interest in cybercrime and digital safety. She writes on online activity, cyber threats, and technology-driven risks. Her work focuses on clarity, accuracy, and public awareness.
