South Korean police have arrested two individuals in connection with the loss of 22 Bitcoin, currently valued at around $1.4 million, that had been seized in 2021 and stored in a third-party cold wallet. The Gyeonggi Northern Provincial Police Agency is investigating multiple procedural breaches after the funds remained missing and undiscovered for nearly four years.
According to local reports, the seized assets were placed in a wallet linked to a third party involved in the original hacking case, rather than a wallet under full police control as required by internal protocol. The third party reportedly retained access to the seed phrase, while the police themselves did not have custody of the credentials, creating a significant governance gap.
The case also involves allegations that the seed phrase was shared under a private borrowing arrangement, enabling unauthorized access to the funds. The delayed discovery, flagged during a nationwide audit following other crypto custody discrepancies, underscores broader institutional challenges around digital asset storage, compliance, and internal oversight in law enforcement handling of crypto assets.
