South Korean prosecutors are investigating the disappearance of Bitcoin that was held in government custody. The case involves digital assets seized during criminal proceedings.
The Gwangju District Prosecutors’ Office said multiple Bitcoins went missing in mid-2025. Internal reviews point to a phishing attack as the cause, rather than a direct breach of government systems.
According to reports, private key passwords were stored on a portable USB device. An employee later accessed a fraudulent website during a routine check, which exposed the credentials.
Once the private keys were compromised, the Bitcoin was transferred out of custody. Because blockchain transfers are irreversible, the assets could not be recovered.
Authorities have not confirmed the exact amount of Bitcoin involved. Local media and internal sources estimate the losses at around 48 to 49 million dollars.
Prosecutors confirmed that an internal investigation is ongoing but declined to share further details. They cited the sensitivity of the probe and did not comment on possible disciplinary actions.
The incident comes as South Korea expands its legal framework around digital assets. Earlier this month, the Supreme Court ruled that Bitcoin held on exchanges qualifies as seizable property under criminal law.
The case has raised concerns about how government agencies manage cryptocurrency. Experts say secure custody requires strict key management and systems kept separate from everyday internet use.
As South Korea continues to formalize crypto enforcement, the incident highlights the challenges of safely handling digital assets within public institutions.
