Bitcoin stolen from under cops noses. A modern-day digital dilemma

South Korean cops seized millions in Bitcoin from criminals. Criminals stole it from them! What can we learn from this?

A tough day at the office

Late last year officials at the Gwangju District Prosecutors’ Office realised that a large stash of Bitcoin seized in criminal cases was no longer in their custody.

Around $50 million had literally vanished.

Totes awks yeah?

Authorities suspect phishing.

What is phishing again?

I mean, Adam, I know what phishing is, but can you explain it for my mate?

Phishing is when attackers trick users into entering passwords or recovery phrases on fake but convincing websites, then move funds instantly.

Let’s go old school. Remember that late 90s email from ‘a mate of the Prince of Nigeria’ who needed your bank details to move cash out of the country? One of the OG phishing scams.

Phishing is now high-tech, with believable websites, emails, even videos, from trusted colleagues.

And here is the modern-day kicker. Phishing for crypto usually results in irreversible transfers. Once nicked, the money can be moved instantly. There is no way to undo it.

Whodunnit

Identifying crypto criminals and hackers is notoriously hard. It could be a single cyber crim in mum’s basement, or more likely a group spread across the globe acting as a gang.

As mentioned in a previous #NerdNews state backed actors are stealing crypto assets as a matter of government policy. North Korea, I’m looking at you.

In a potentially gorgeous full-circle moment, it is conceivable that the criminals from whom the bitcoin was originally confiscated, approached an online gang to nick it back for a slice of the action. I know, that’s some serious Ocean’s Twelve territory!

Law enforcement level up

This incident highlights a broader institutional security problem.

As cryptocurrency becomes the currency of choice for more criminals, law enforcement agencies will hold increasing amounts of seized crypto.

But digital wallets are nothing like old-fashioned evidence rooms full of cars, drugs, firearms.

And ‘breaking in’ is a different game altogether.

If access details are exposed even once, attackers can drain funds permanently. There is no bank to reverse the transaction and no central authority that can freeze a blockchain transfer after the fact.

Some South Korean reporting suggests access details may be stored on USB drives. A cyber-security 101 no-no.

Why this matters

This is not just embarrassing, it is structurally important.

Legal evidence is at risk, with assets meant to be preserved for trials or forfeiture able to simply disappear.

Going forward, police need enterprise grade security including hardware wallets, multi-signature controls and protocols to keep secret access codes firewalled from the broader internet.

And human error remains the weakest link. This was not a failure of blockchain cryptography. It was a social engineering failure, where a moment of inattention can undo years of investigative work.

As I always say when speaking at cybersecurity events;

“You can have all the software in the world, but you’re only as strong as your weakest link. And that link is Gary from accounts … who loves cat videos!”

Will they catch them

The crucial thing here is time. How long after the theft was the audit that uncovered the missing loot? Was it hours? Days? Months?

If the baddies got a significant head start, the chances of recovery diminish rapidly.

And not surprisingly, the red-faced Korean cops are keeping these details pretty close atm.

For now, the case is a painful reminder that once governments seize crypto, they also inherit serious cybersecurity risks.