In a major security failure, South Korean prosecutors have lost seized Bitcoin worth approximately 70 billion won ($48 million) to a phishing attack. The Gwangju District Prosecutors' Office confirmed the loss, which occurred in the summer of 2025, after an exclusive report by OhmyNews.
The breach was discovered during a routine inspection of confiscated crypto assets. Internal sources revealed that staff accidentally accessed a fraudulent website while checking on the seized Bitcoin holdings. Compounding the security lapse, the office had stored Bitcoin-related passwords on USB drives, a practice that falls far below standard industry protocols for securing digital assets.
A prosecutor official independently confirmed the Bitcoin loss is factual but stated the office cannot publicly disclose the exact damage amount or coin quantity. Prosecutors are taking recovery measures, though recovery is generally considered difficult once phished cryptocurrency moves to external wallets.
The incident exposes critical vulnerabilities in the state's ability to manage digital evidence. It follows a pattern of institutional unpreparedness, where legal authorities lack the specialized technical expertise for long-term crypto custody. Experts point to the absence of enterprise-grade security measures, such as multi-signature wallets or hardware security modules, as a fundamental flaw.
This is not the first such incident involving Gwangju authorities. In November 2021, 1,476 BTC disappeared during a police seizure operation from a gambling site, with litigation still pending before the Supreme Court. The current phishing incident is a separate case involving prosecutors.
The loss carries significant legal and financial repercussions. It may jeopardize the original criminal case from which the Bitcoin was seized, affecting asset forfeiture proceedings and victim restitution. The scandal is likely to accelerate calls for formalized national standards for digital asset custody by law enforcement, potentially involving South Korea's Financial Services Commission (FSC) and the Ministry of Justice.
The incident also casts a shadow over South Korea's reputation as a technologically advanced crypto regulator. It occurs just two weeks after a Supreme Court ruling established that Bitcoin held on cryptocurrency exchanges can be legally seized under the Criminal Procedure Act, highlighting the growing intersection of law and digital assets.
Globally, the event underscores a systemic challenge. According to PeckShield, scam and phishing-related losses in the crypto sector reached $1.37 billion in 2025, a 64% increase from the prior year. With over 16 million South Koreans holding crypto accounts, the pressure on institutions to develop secure, auditable protocols has never been greater.
