TLDR:
- Prosecutors lost approximately $48 million in confiscated Bitcoin after accessing a fraudulent phishing site.
- The stolen cryptocurrency was stored on USB drives rather than in institutional custody solutions for security.
- Wallet passwords were exposed during routine asset inspections, allowing unauthorized access to seized funds.
- South Korea has expanded its crypto seizure authority since the 2018 Supreme Court ruling on digital asset property.
South Korean authorities are investigating a major security breach involving confiscated cryptocurrency assets.
The Gwangju District Prosecutors’ Office has confirmed the loss of Bitcoin valued at approximately 70 billion won, equivalent to $48 million.
The incident occurred during routine asset management procedures last year. Investigators suspect a phishing attack enabled unauthorized access to digital wallets stored on USB drives by the prosecution office.
Security Breach Exposes Vulnerabilities in Asset Management
The Bitcoin in question was originally seized in connection with an illegal gambling investigation. Prosecutors had confiscated the digital assets as criminal proceeds under existing property laws.
The cryptocurrency was stored on portable USB devices rather than institutional custody solutions.
This storage method has raised questions about standard security protocols for handling seized digital assets.
The Gwangju District Prosecutors’ Office discovered the loss while conducting standard verification procedures. Officials maintain password information on removable storage devices for access management.
The office was regularly checking for abnormalities in confiscated financial assets when the breach was detected. Local media reports indicate irregularities in the Bitcoin holdings became apparent during these routine inspections.
During a regular inspection of confiscated financial assets, prosecution officials accessed what they believed was a legitimate website.
However, investigators were inadvertently connected to a fraudulent phishing site. An official from the prosecutor’s office explained the circumstances surrounding the breach.
“We know that something happened after accidentally accessing a so-called ‘fake (scam) site’ during the regular inspection of confiscated Bitcoin,” the official stated.
The source added that discussions within the prosecution indicated the amount of lost bitcoins was worth 70 billion won.
The incident represents one of the most significant losses of cryptocurrency under government custody. This mistake exposed wallet passwords to unauthorized parties.
The compromised credentials allowed attackers to transfer the Bitcoin from state custody. Unlike technical exploits targeting blockchain vulnerabilities, phishing attacks exploit human error and poor internal controls.
Investigation Ongoing as Authorities Remain Tight-Lipped
When approached for official comment, a spokesperson from the Gwangju District Prosecutors’ Office declined to verify details.
The official stated, “We cannot confirm it,” when questioned about the reported loss. This response came despite multiple inquiries about the incident from local media outlets. The prosecution office has maintained a cautious stance regarding public disclosure of the breach.
Meanwhile, another official at the prosecutor’s office provided limited information about ongoing efforts. The source noted that investigators are striving to establish the locations of the seized properties.
However, the official acknowledged they could not verify any additional information at the moment. The investigation remains active as authorities work to trace the missing digital assets.
South Korea has expanded its authority over cryptocurrency seizures in recent years. The Supreme Court established legal precedent in 2018 by ruling that cryptocurrencies qualify as property.
This decision recognized digital assets as intangible items with economic value. Courts determined that crypto holdings linked to criminal activity could be confiscated under the Criminal Procedure Act.
The Gwangju District Prosecutors’ Office has handled multiple large-scale crypto cases. In March 2024, the office pursued the recovery of approximately 170 billion won in Bitcoin.
That seizure also involved proceeds from illegal gambling operations. Subsequent rulings have broadened enforcement powers over digital assets.
Financial regulators announced plans in January to test payment freeze systems for crypto accounts.
The post 48 Million in Seized Bitcoin Stolen from South Korean Prosecutors in Phishing Attack appeared first on Blockonomi.