South Korea's Lethargic Defense: Millions of Bitcoin Stolen in Phishing Attack

The public prosecutor’s office in Gwangju County, South Korea, is investigating another case of digital assetlessness: Considerable amounts of confiscated Bitcoin have disappeared – not by professional hackers, but by a comparatively simple phishing attack. An internal review revealed a lethargic security culture that did not adequately protect even official administrative processes. The loss raises uncomfortable questions, as well as government agencies seem completely unprepared against the growing wave of cryptocurrency attacks.

Phishing scams also hit government agencies

An official from the Gwangju Procuratorate confirmed to local media such as Yonhap News: “We are currently investigating the circumstances surrounding the loss and whereabouts of the seized items.” The problem: The coins were apparently stolen during the normal storage process through phishing attacks – a method in which fraudsters impersonate trusted wallets or platforms to trick users into revealing their private keys or seed phrases.

The irony of the situation is bitter: While authorities continuously warn private individuals to secure their digital assets, millions disappear from their own custody. The decentralized and irreversible nature of cryptocurrencies makes such incidents particularly problematic – once stolen, the coins cannot be retrieved.

Chainalysis report: 2025 was record year for cryptocurrency scams

The South Korean situation is not an isolated phenomenon. According to blockchain analytics firm Chainalysis, cryptocurrency scams and scams drained victims of an estimated $17 billion in 2025. Of particular concern: a 1,400 percent year-over-year increase in identity theft scams.

The picture is made even bleaker by AI-powered attacks, which have proven to be 4.5 times more lucrative than traditional methods – fueled by professionalized infrastructures such as phishing-as-a-service tools, deepfake technology, and industrial money laundering setups. These developments show that the industry is threatened not only by individual opportunists, but by organized, well-resourced criminals.

Markets react lethargically to persistent security risks

The financial markets also react comparatively unshakably to such news. Bitcoin is currently trading at $84.65K with a 24-hour decline of -5.41%, which is more of an ordinary market correction than a shock. The price had previously slipped to $85,200 after a stronger sell-off in US morning trading – a new low for 2026.

Other markets are also reinforcing this picture of resignation: The Nasdaq recorded losses of about 1.5 percent, driven by a decline of over 11 percent by Microsoft after its quarterly report for the fourth quarter. Even gold, which is typically preferred by investors as a safe haven, showed volatility, quickly falling back to $5,200 from temporary highs above $5,600.

Systemic vulnerabilities require radical rethinking

The case from Gwangju reveals an inconvenient truth: If even state authorities cannot safely handle seized crypto assets, this indicates systemic vulnerabilities. A lethargic reaction by industry and regulators – in the face of these escalating threats – is simply irresponsible. While private investors have long since learned to take care of their own security, official institutions are lagging behind. Stricter warehouse standards, multi-signature security protocols and regular security audits are needed to prevent such incidents.