Two individuals have been arrested in South Korea after authorities lost 22 seized Bitcoin — now valued at roughly $1.4 million — that had been placed in a third-party cold wallet.
Local outlets first reported the missing 22 BTC in early February, with additional details emerging as the Gyeonggi Northern Provincial Police Agency continued its investigation. According to a Wednesday report from Dong-A Ilbo, multiple internal policy violations ultimately led to the loss of the funds.
Police protocol, which had been in place for years, requires that any confiscated cryptocurrency be stored in a cold wallet fully controlled by law enforcement. However, after the Bitcoin was voluntarily handed over following a hack of a local exchange in November 2021, it was stored in a cold wallet owned by a third party connected to the hacking case. That third party also retained access to the wallet’s seed phrase.
Compounding the issue, authorities reportedly did not possess the seed phrase themselves.
Funds transferred under unusual circumstances
Investigators are still working to determine exactly how the assets were moved. According to Dong-A Ilbo, an official at a company with access to the seed phrase allegedly shared it with an individual identified as “Mr. Jeong” as part of a private lending arrangement.
So far, two suspects have been taken into custody by the Gyeonggi Northern Provincial Police Agency in connection with the incident.
The case has been further complicated by earlier misconduct tied to the original exchange hack. An investigator involved in that probe was sentenced in August 2025 on bribery charges after it was revealed he had accepted money in exchange for favorable treatment in the investigation.
Authorities only discovered the missing Bitcoin four years later during a nationwide audit prompted by a separate case involving the disappearance of 320 BTC from the Gwangju District Prosecutors’ Office.
