While cryptocurrency mishaps have historically affected individual investors and exchanges, recent events show that even government authorities are not immune.
In South Korea, authorities are investigating the loss of a substantial Bitcoin (BTC) stash seized in a criminal case in 2021, local media reports.
According to a Friday report from the Seoul Economic Daily, 22 BTC, worth approximately $1.5 million at current prices, were held by the Seoul Gangnam Police Station, and the loss was uncovered during a nationwide audit of digital asset custody practices.
The Bitcoin had been handed over to Gangnam police in November 2021, but the loss went unnoticed because the probe was put on hold. Although the physical USB containing the funds was never taken, the Bitcoin stored on it was illicitly siphoned.
The Gyeonggi Bukbu Provincial Police Agency has launched an internal investigation to determine how the leak occurred and whether any internal personnel were involved.
The probe comes after a separate incident at the Gwangju District Prosecutors’ Office, where 320 BTC — valued at roughly $21.3 million at current prices — went missing in August 2025. Prosecutors attributed the loss to a leaked password resulting from a phishing attack during official storage.
A cryptocurrency phishing attack occurs when scammers deceive users into revealing private keys, passwords, or seed phrases by posing as trusted wallets or platforms. Such attacks are prevalent because crypto transactions are decentralized and irreversible.
The two incidents underscore the persistent challenges of securely managing digital assets, even for government authorities.
Early last month, South Korea’s Supreme Court ruled that Bitcoin held on cryptocurrency exchanges can be seized under the country’s Criminal Procedure Act. The ruling establishes that digital assets held on exchanges can be subject to confiscation in criminal investigations, despite lacking a physical form.
Billions in Cryptocurrency Held by Government Authorities
South Korean authorities are not alone in holding large cryptocurrency reserves. In June 2025, America’s leading crypto exchange, Coinbase, announced assisting the U.S. Secret Service in seizing $225 million in crypto allegedly stolen by scammers, marking the agency’s largest crypto seizure to date.
In the U.K., authorities considered in October whether to retain $6.4 billion in seized Bitcoin rather than return it to fraud victims. The Bitcoin was confiscated in 2018 from scammers who defrauded 128,000 investors in China.
