Due to recent incidents of lost seized virtual assets by law enforcement agencies, the Board of Audit and Inspection in South Korea is monitoring asset management practices of these institutions.
Following a disturbing trend of lost seized or confiscated virtual assets by Korean investigative agencies and the National Tax Service, the Board of Audit and Inspection has launched a monitoring initiative focused on the management of these assets. The agencies under scrutiny include the prosecutors’ offices, police, and the National and Customs Tax Services. While the current oversight does not constitute a formal audit, findings from this monitoring could lead to a comprehensive audit depending on the outcomes of the preliminary assessments.
The decision for this oversight followed several reported incidents where significant amounts of virtual assets, including Bitcoin, were lost. For instance, last August, the Gwangju District Prosecutors' Office lost approximately 320 seized Bitcoins, managing to recover them only six months later. Similarly, the Gangnam Police Station reported a loss of 22 Bitcoins valued around 200 million KRW while investigating a hacking incident involving virtual asset businesses, marking a troubling trend of mismanagement within these crucial law enforcement units.
Additionally, the National Tax Service was involved in an embarrassing incident last month when it publicized the seizure of virtual assets from high-value tax delinquents, inadvertently revealing sensitive information that led to the theft of about 69 million KRW worth of these assets. The value of the lost virtual assets from these incidents is estimated to be around 4.21 billion KRW, raising serious questions about the competency and security protocols within agencies tasked with managing these digital assets.
