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South Korea Arrests Two Over Missing Police Bitcoin as Tax Agency Leak Leads to Token Return

A nationwide audit alongside a tax office leak exposed basic custody lapses across agencies, prompting pledges of stricter controls.

Overview

  • The Gyeonggi Northern Provincial Police Agency arrested two suspects on Feb. 25 in the disappearance of 22 BTC that Gangnam Police seized in 2021 and later found missing during a nationwide audit.
  • Investigators say the cold wallet device stayed in police custody but the coins were moved in 2022 using a mnemonic the police never controlled, with a third party managing the wallet’s keys.
  • Police have not confirmed recovery of the 22 BTC, while separate reporting notes an ongoing probe that includes allegations of bribery linked to the original hacking investigation.
  • The National Tax Service inadvertently published seed phrases in a press release, enabling transfers of 4 million PRTG tokens that on-chain analysts and Professor Jaewoo Cho later confirmed were returned to their original wallets.
  • Authorities assigned the cyber unit to trace the tax-related transfers and announced tighter custody protocols for seized digital assets, including dual custodians, sealed hardware and recovery phrases, and plans to use specialized custodians.