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Prosecutors launch internal investigation after losing 320 seized Bitcoins worth $28.8 million

Published: 27 Jan. 2026, 17:44 Updated: 27 Jan. 2026, 18:12

Bitcoin digital assets are seen in this file photo. [JOONGANG ILBO]

Prosecutors have launched an internal investigation after losing 320 Bitcoins valued at approximately 41.6 billion won ($28.8 million), which had been seized as criminal assets.

The Gwangju District Prosecutors’ Office lost the digital assets in August last year, according to sources obtained by the JoongAng Ilbo on Tuesday.

The Bitcoins were obtained during a November 2021 police raid of a cryptocurrency wallet belonging to a woman identified as the daughter of an illegal gambling site operator.

The police arrested her on charges of attempting to smuggle approximately 1,700 Bitcoins — that she allegedly earned by operating gambling sites overseas — into Korea.

Although police intended to seize all of the Bitcoins, they managed to secure only 320. Investigators later discovered that the remaining 1,400 had been transferred out of the wallet during the seizure. At current prices, they would be worth around 190 billion won.

With the additional 320 Bitcoins lost by the prosecution, the total value of the missing assets amounts to roughly 230 billion won.

Prosecutors reportedly did not become aware of the loss until recently, when they were preparing to transfer the 320 Bitcoins to the national treasury after the woman’s conviction was finalized.

The Gwangju District Prosecutors’ Office [JOONGANG ILBO]

The Supreme Court upheld the woman’s conviction on Jan. 8, confirming her guilt on charges including operating an illegal gambling operation that she inherited from her father.

The 320 Bitcoins were transferred to a third-party wallet on the afternoon of Aug. 21, 2025, according to investigators. The breach was discovered during a review of the digital assets amid a personnel handover following staff reassignments at the prosecution office.

Prosecutors suspect the incident may have involved phishing, and they believe that many of the stolen Bitcoins have yet to be converted into cash and may still be traceable.

“We have launched an internal audit, including the seizure of mobile phones from personnel involved in the handover,” a prosecution official said. “We are also investigating the allegedly phishing-linked wallet site as part of efforts to recover the assets.”

The lost Bitcoins were reportedly stored on a physical USB device, known as a “cold wallet,” that contained the security key for access.

Prices of digital assets, including the Bitcoin, are displayed on an electric board at Bithumb Lounge in Seocho District, southern Seoul, on Jan. 23. [NEWS1]

Prosecutors believe that the security key may have been exposed when the wallet was connected to a computer that accessed a phishing website. While some have raised the possibility of a hacking incident targeting internal systems, cybersecurity experts say that scenario is unlikely.

Instead, some experts suggest the key may have been leaked during shared handling of evidence or even taken deliberately by an insider.

“It's virtually impossible to hack an investigative agency’s internal system and steal a private key,” said Cho Jae-woo, the director of the Blockchain Research Institute at Hansung University. “If this was caused by a phishing website, it raises questions about whether those managing the digital assets had adequate understanding of security and technology.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY HWANG HEE-GYU [[email protected]]