South Korea Bitcoin lost in phishing scam
Journalist
Hassan Shitu
Journalist
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South Korean prosecutors are looking into the massive loss of Bitcoin, which was treated as the proceeds of crime, following an internal audit that showed the money could have been lost while it was held by the government.
The case, believed by authorities to be a phishing attack, is coming to raise new questions about the storage and security of seized digital assets as the country continues to expand its legal and regulatory powers over crypto markets.
A report released by Yonhap News on Thursday said that the Gwangju District Prosecutor's Office has recently confirmed that it has confiscated a large amount of bitcoins found during a previous criminal case.
Prosecutors suspect that the crime was accumulated and managed in the middle of last year.
Officials declined to reveal the exact amount or current estimate of the missing person, citing an ongoing investigation, but fishing was cited as the main cause.
The seized bitcoins were lost after the wallet password was exposed, officials said.
A prosecutor's official said that investigators are working to determine the location of the seized property, but have yet to confirm any additional information.
Local news reports that Bitcoin is being linked to illegal gambling and is being seized as illegal property when it goes missing.
Estimates reported by local media suggest the price could be in the tens of billions of dollars, which translates into several million dollars, but the numbers have not been confirmed by prosecutors.
Early reports indicated that Bitcoin was stored in a portable USB, rather than a more permanent storage system.
The wallet's password was revealed to a third party during a formal investigation of the seized items, which allegedly opened up an opportunity for illegal access and transactions.
The case is one of the most recent cases of stolen cryptocurrency being re-stolen by law enforcement through social engineering rather than technical advantages.
Phishing attacks are deceptive rather than technical because they use a trusted party. In a more institutionalized environment, they thrive on human error and weak internal controls, in contrast to blockchain's weaknesses.
The Gwangju District Prosecutor's Office is no stranger to large-scale crypto seizure cases. In the year In March 2024, he sought to recover 170 billion won, or about $127 million at the time, in Bitcoin linked to another illegal gambling operation.
Confiscation of digital assets has gradually become institutionalized in South Korea, with several major Supreme Court rulings in recent years clarifying that cryptocurrencies can be controlled as assets under the Criminal Procedure Code.
Such a legal basis was first established in 2018, when the Supreme Court ruled that cryptocurrencies are intangible assets and have economic value and can be confiscated if they are related to crime.
Later court decisions further expanded the power of seizure, and in a case confirmed in December, bitcoins stored on local exchanges such as Upbit and Bitmap could be seized.
The latest case comes on a day when South Korean regulators are busy increasing controls over the crypto industry.
In January, financial regulators announced their intention to test a payment freeze system that would allow investigators to temporarily block crypto-related accounts before suspected illicit funds are withdrawn or deposited overseas.
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