South Korean Prosecutors Probe Disappearance Of Seized Bitcoin

South Korean prosecutors are investigating the disappearance of seized Bitcoin after an internal review revealed that a notable amount may have gone missing while under state custody. This has prompted fresh concern over how digital assets are handled during criminal investigations.

Internal Review Uncovers Possible Security Failure

As noted, the investigation is being led by the Gwangju District Prosecutors’ Office, following findings from a routine internal audit. Officials believe the seized Bitcoin may have been lost around the middle of last year during storage and management by the state. A phishing incident is being examined as a possible cause of the loss.

Authorities have refused to confirm the volume or value of the missing seized Bitcoin, citing the sensitivity of the ongoing probe. The lack of details has drawn public attention, especially given the office’s past involvement in large digital asset cases. In March 2024, the same prosecutors pursued the recovery of about 170 billion won, or $127 million, in seized bitcoin tied to an illegal gambling network.

The case has raised wider questions about wallet protection, access control, and oversight within government agencies. While law enforcement has increased its capacity to confiscate crypto assets, the incident highlights the risks that come with holding seized bitcoin for extended periods.

Legal Basis For Seizing Digital Assets

South Korea’s authority to confiscate Bitcoin was first established in 2018. At the time, the Supreme Court ruled that cryptocurrencies qualify as intangible assets with clear economic value. This decision allowed Bitcoin to be treated as property under the Criminal Procedure Act.

Following that ruling, the state seized 191 BTC from a convicted operator of an illegal website. The judgment became a key reference point, giving prosecutors legal backing to classify seized Bitcoin as evidence or property subject to forfeiture when linked to criminal activity.

In another important update, South Korean customs investigators recently dismantled a large cross-border crypto money laundering network. This criminal chain was accused of moving close to 150 billion won through digital assets and domestic bank channels.

Court Rulings Expand Scope Of Seizures

In December 2025, the Supreme Court expanded this position by ruling that seized Bitcoin held on centralized exchanges can also be confiscated. The case involved over 55 BTC taken during a money laundering investigation in 2020.

The court stated that Bitcoin stored on exchanges still counts as electronic information with independent value. This ruling strengthened the state’s power, even as the latest case exposes gaps in safeguarding seized Bitcoin.

Meanwhile, earlier this month, reports say that South Korea’s lawmakers approved an amendment permitting the issuance and trading of tokenized securities. This  highlights the government’s support for blockchain in finance.