South Korea investigates phishing attack that resulted in the loss of seized bitcoin

South Korean authorities are examining one of the most troubling cases in the management of digital assets by public institutions. Gwangju district prosecutors are investigating the disappearance of a significant amount of bitcoin that had been seized in criminal proceedings, after an internal audit detected that the coins were stolen through a phishing attack during the official storage process.

Authorities investigate the loss of cryptocurrencies in official custody

The event represents a breaking point in the narrative of institutional security. While government bodies aim to oversee and regulate the digital asset industry, the accidental loss of their own seized funds exposes critical vulnerabilities in management protocols.

According to local reports, the breach occurred during the official custody of the confiscated coins. A spokesman for the court said: “We are currently examining the circumstances and whereabouts of the assets, although we are unable to disclose specific details of the case under investigation.” The search for responsibilities and understanding of how the incident occurred is still ongoing.

Phishing: the threat that transcends borders and sectors

The attack that allowed the theft of cryptocurrencies follows the traditional modus operandi of phishing in this ecosystem. Scammers trick users — now including public agencies — by impersonating trusted wallets or platforms, getting them to hand over private keys or recovery seed phrases. The decentralized and irreversible nature of cryptocurrencies makes this attack vector particularly effective.

What is worrying is the industrial scale that this criminal methodology has reached. Studies reveal that AI-powered attacks are approximately 4.5 times more lucrative than conventional tactics, operating with professional phishing-as-a-service tools, advanced deepfake technology, and sophisticated money laundering structures.

Cryptocurrency fraud continues to grow globally

The loss suffered by the Korean authorities reflects a broader trend of vulnerability in the sector. According to Chainalysis analysis, cryptocurrency-related frauds and scams extracted approximately $17 billion from victims during 2025, driven by a staggering 1,400 percent year-over-year increase in phishing modalities.

This scenario raises questions about the real ability of governments and institutions to securely custody digital assets. If official protocols can be penetrated through phishing, trust in centralized storage systems is genuinely questioned, opening a debate about the best security practices that even authorities should adopt in the age of digital assets.