Summary

  • The National Police Agency will fully entrust management of seized crypto assets to Dunamu’s Upbit Custody.
  • Seized crypto assets will be stored in offline cold wallets, and Upbit will provide full compensation if losses occur during custody.
  • The move followed cases in which Bitcoin was diverted or lost because individual investigative units failed to properly manage hardware wallets.

Forecast Trend Report by Period

South Korean police will store cryptocurrency seized during investigations with Upbit Custody, the digital-asset custody service operated by Dunamu. The move is meant to reduce the risk of loss or leaks that arose when individual investigative units managed the assets themselves.

The National Police Agency will fully outsource management of crypto assets seized by investigative units nationwide to Upbit Custody starting Nov. 9, Segye Ilbo reported. It has also distributed an operations manual to investigative units, with practical training under way since Nov. 6.

Seized crypto assets will be transferred to Upbit Custody and stored in offline cold wallets until they are returned, temporarily returned or transferred with the case. Once a case is referred to prosecutors, the assets will be moved to an account linked to the prosecution office.

Upbit will provide 24-hour guidance on transfer procedures based on each token's blockchain network and will also cover transfer fees. If losses occur during the custody process, Upbit will provide full compensation.

Until now, individual investigative units had used separate hardware wallets to store seized crypto assets themselves. In some cases, poor management of mnemonic codes needed to recover the wallets led to assets being lost or diverted.

Police in Gwangju tried to seize 1,798.3 Bitcoin during a 2021 investigation into an illegal gambling website. Some of the tokens were diverted during the transfer process, and authorities ultimately secured only 320.8 Bitcoin. At Seoul's Gangnam Police Station, 22 Bitcoin held in custody were also lost in 2022.

Separately, police plan to strengthen their ability to respond to cyberterror incidents including hacking as they overhaul their digital-asset management system. They also plan to expand information sharing with related institutions in South Korea and abroad and seek accession to the Budapest Convention, an international treaty aimed at combating cybercrime. Authorities are also reviewing a plan to restore internal cyber and forensic investigation units.

Minseung Kang