South Korea Prosecutors Lose Seized $48M Bitcoin to Phishing Scam

In a shocking development, South Korean prosecutors have lost roughly $48 million worth of seized Bitcoin after falling victim to a phishing scam. The loss was discovered during a routine review of confiscated cryptocurrency assets, prompting questions about how government agencies handle digital currencies.

Routine Check Turns into Major Loss

The Gwangju District Prosecutors’ Office discovered the bitcoins were missing while inspecting assets confiscated from criminal cases. The incident likely occurred in mid-2025, though the discovery was only recently made public.

Based on their investigation, an official inadvertently visited a fraudulent website while a USB drive containing wallet credentials was connected to the computer. As a result, attackers may have obtained the private keys and transferred the Bitcoin out of government custody.

Prosecutors confirmed the loss but have not disclosed the exact amount or number of coins involved. However, internal estimates place the value of the missing funds at about 70 billion South Korean won (roughly $48 million).

“We are currently investigating the circumstances surrounding the loss and whereabouts of the seized items. We cannot confirm any specific details,” an official stated.

Security and Regulation Under Scrutiny

Industry observers say storing wallet credentials on unprotected USB drives falls short of modern security standards. As a result, the breach has intensified calls for government agencies to adopt stronger safeguards to better protect digital assets.

Just weeks before the breach was revealed, South Korea’s Supreme Court affirmed that Bitcoin held on exchanges can be legally seized under criminal procedure laws. The ruling marked a significant step in law enforcement’s ability to confiscate digital assets linked to crime. However, the phishing incident exposed weaknesses in custody practices.

Meanwhile, the broader crypto market continues to face rising phishing threats, with 2025 recording substantial scam-related thefts globally.  Last September, an investor lost over $6 million to a phishing exploit. The latest incident highlights that even government bodies are not immune to social engineering attacks. It also serves as a reminder that strong security practices remain essential, whether digital assets are held in private wallets or public custody.

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