The Gangnam Police Station in Seoul has arrested a 40-year-old operator from a cryptocurrency company, identified only as Mr. Lee, on suspicion of illegally diverting 22 Bitcoins that were in police custody. The Uijeongbu District Court issued an arrest warrant, citing concerns over flight risk and destruction of evidence, although a request to detain the company’s CEO was denied. The Bitcoins were reportedly taken from a police storehouse after having been seized due to a previous hack that the company had reported in 2020.

In May 2022, it was revealed that the operator and others used knowledge of a crucial recovery phrase known as a 'mnemonic code' to recreate the wallet and transfer the Bitcoins. These digital assets were kept in a cold wallet secured on a USB drive. The theft was significant, with the Bitcoins valued at approximately 1 billion KRW at the time, and it was discovered that the diverted assets had been fully liquidated into cash. The company’s CEO indicated that financial difficulties motivated the crime, while the operator has denied the allegations.

This incident surfaced during a nationwide inspection of cryptocurrencies held by police, prompted by an earlier case in January where 320 Bitcoins went missing from the Gwangju District Prosecutor’s Office. Additionally, the arrested operator is facing charges related to aiding illegal political financing, further complicating the case as it connects with broader investigations into cryptocurrency fraud in South Korea.