South Korea’s law enforcement system is facing renewed scrutiny after another loss of seized cryptocurrency came to light. On February 13, 2026, the Gangnam Police Station reported that 22 BTC had gone missing. The article values the loss at about 2.1 billion won, or roughly $1.5 million. The coins had been confiscated from criminals, but the disappearance has shifted attention to how authorities actually hold digital assets once they are seized.
The missing Bitcoin was discovered during a nationwide audit that began after an earlier incident at a prosecutors’ office. Officials have not said which department handled the funds or how the assets vanished. That lack of detail has added to concerns over whether institutions have the technical controls needed for crypto custody.
A larger prosecutors’ loss was reported less than a month earlier
Less than a month before the Gangnam case, the Gwangju District Prosecutors’ Office disclosed an even bigger loss: 320 BTC, valued at about $48 million. Investigators linked that seizure to a woman identified only as “A,” who allegedly ran a Bitcoin gambling site with her father.
Prosecutors also found that 1,800 BTC had been smuggled into South Korea, and part of that amount was stolen before authorities secured it. The police case and the prosecutors’ case involve different offices, but the pattern looks similar: crypto was seized, yet the custody chain did not fully protect the assets.
USB hardware wallets are not the same as institutional-grade custody
Both cases involved USB hardware wallets. Those devices can be secure for individual holders, but official custody requires more than physical possession of a wallet. Control over private keys, the status of backup phrases, and the environment in which a wallet is created all matter. If any of those elements are mishandled, the assets may remain exposed.
Analysts cited in the source outlined several possible failures. One is that authorities may have kept the confiscated USB devices without moving the Bitcoin into wallets controlled by the state, which could have left the original owners able to regain access through backups. Another is that if the wallets were created on internet-connected computers, the private keys may have been compromised at the moment of setup. A single weak point would be enough.
Professional custody standards remain absent from current practice
Specialized custody firms typically use multi-signature wallets, hardware security modules, and strict separation between verification and access. Under that model, a transfer requires more than one independent authorization, which sharply reduces the risk tied to one person or one device.
The report says South Korean authorities do not have those systems in place. That leaves seized cryptocurrency exposed to avoidable risks. After losses reported by both police and prosecutors, the gap between professional custody standards and current law enforcement practice is now hard to ignore.