South Korea's Deputy Prime Minister and Minister of Economy and Finance, Koo Yun-cheol, has ordered an urgent government-wide review of how public agencies manage seized digital assets. This directive follows a series of high-profile custody failures that resulted in the loss of millions of dollars worth of cryptocurrency, exposing critical security and procedural gaps within state institutions.
The review will involve key financial regulators, including the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS), alongside enforcement agencies. Its primary goal is to inspect current custody practices, assess compliance with existing guidelines, and implement measures to strengthen security controls and prevent recurrence. Koo emphasized that the state does not hold crypto as investment assets; the digital assets in question are exclusively those seized during enforcement actions related to unpaid taxes and criminal investigations.
The push for reform was triggered by two major incidents. First, in 2022, police in Seoul's Gangnam district lost access to 22 Bitcoin (BTC), worth approximately $1.4 million at the time, after relying on a third party to manage the seized funds without retaining control of the private keys. The case led to arrests and an ongoing investigation into possible bribery, intensifying calls for clearer custody procedures.
Second, the National Tax Service suffered a significant security breach when it inadvertently published a seed phrase in photos of seized assets. This leak led to the theft of tokens known as Pre-Retogeum (PRTG), valued at roughly $4.8 million, from a seized wallet. The Tax Service has since apologized and revised its internal manuals and staff training protocols.
These failures have drawn increased scrutiny to South Korea's public sector crypto oversight, which also faces criticism following a recent glitch at the Bithumb exchange. In February 2026, a system error briefly credited users with 620,000 non-existent Bitcoin, highlighting broader vulnerabilities in digital asset systems. The government's comprehensive review now aims to address both technical and procedural gaps, improve coordination between agencies, and establish South Korea as a global example for secure government-held cryptocurrency management.