Two people have been arrested in South Korea in relation to a case in which police lost 22 seized Bitcoin, now worth $1.4 million, after storing the coins in a third-party cold wallet.
The news of the lost 22 Bitcoin (BTC) was first reported by local media in early February, with more details about the case being uncovered as an investigation by the Gyeonggi Northern Provincial Police Agency into the matter continues.
According to a report from South Korean publication Dong-A Ilbo on Wednesday, investigators found that there were multiple policy breaches that eventually led to the funds being stolen.
Under the station’s protocol, which had already been in place for multiple years, any seized crypto is supposed to be stored in a cold wallet under full control of the police.
However, after the BTC was seized via voluntary submission following a hack on a local exchange in November 2021, it ended up being stored in a cold-wallet owned by a third-party related to the hacking case, who also had access to the wallet’s seed phrase.
To make matters worse, the police themselves also reportedly had no idea what the seed phrase was.
Funds were pulled in strange circumstances
Police are still investigating the circumstances that led to the funds being stolen.
However, the South Korean outlet stated that an official from a company with access to the seed phrase gave it over to an individual known as “Mr. Jeong” as part of a borrowing agreement between the two.
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So far, two individuals have been arrested by the Gyeonggi Northern Provincial Police Agency in connection with the case.
Adding complexity to the matter, an investigator working on the initial case relating to the hacked exchange from which the seized funds came was sentenced in August 2025 over bribery charges. It was found that he had been offered money in exchange for giving a favorable investigation.
It took four years before authorities discovered the funds had gone missing, with the problem flagged after a nationwide audit in response to the disappearance of 320 BTC in a separate case at the Gwangju District Prosecutors’ Office.
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