South Korea's Gangnam Police Station has confirmed the loss of 22 Bitcoin (BTC), valued at approximately ₩2.1 billion or $1.6 million, from its custody. The digital assets were originally seized from suspects during a 2021 investigation and had been held since then.
The disappearance was uncovered during a nationwide audit of digital asset handling by law enforcement agencies. This audit was initiated following a separate, larger incident in January 2026 where the Gwangju District Prosecutors' Office lost 320 Bitcoin (worth about $29 million) in a phishing attack during a staff credential handover.
Intriguingly, the physical cold wallet—a USB-style device containing the private keys—remained in the police station's possession. However, investigators discovered that the Bitcoin had been transferred out of the storage wallet to an unidentified external address without authorization. This suggests the digital keys were compromised and the assets moved without the physical hardware being stolen.
The Gyeonggi Northern Provincial Police Agency has launched a formal internal investigation to determine how the transfer occurred and whether any police personnel were involved. Authorities are examining internal access logs, wallet key management procedures, and blockchain transaction records. So far, police have not publicly accused staff of criminal involvement and have not confirmed whether any of the missing Bitcoin have been recovered or traced.
This incident is part of a broader pattern of custody failures in South Korea. In early February 2026, Bithumb exchange mistakenly credited customers with 620,000 BTC (an error valued at a staggering $43 billion) during a promotional event instead of Korean won. Although most funds were recovered, the error temporarily disrupted markets.
The case highlights growing scrutiny and operational risks associated with law enforcement agencies securing digital assets obtained in criminal cases, particularly concerning key management, internal controls, and audit procedures.
