Key Highlights
- Gwangju prosecutors recovered 320 BTC, selling slowly to protect the market and return 31.5B won.
- The hacker returned stolen Bitcoin after exchanges froze the assets, avoiding liquidation.
- Govt tightens crypto security after NTS leak; Bithumb faces AML review, users mostly unaffected.
South Korea’s Gwangju District Prosecutors’ Office has wrapped up an unusual case involving the recovery and sale of a large amount of Bitcoin, with the proceeds now handed over to the national treasury. In total, prosecutors sold 320.8 BTC at market prices, bringing in about 31.59 billion won (~22 million).
The situation dates back to last August, when Bitcoin was accidentally lost during a transfer after officials fell victim to a phishing attack. In a surprising turn of events, the stolen cryptocurrency was sent back from the hacker’s wallet last month, allowing authorities to regain control of the funds and eventually sell them.
As per a local report, the Bitcoin originally belonged to Ms. A, the daughter of a couple arrested for operating an illegal overseas gambling website valued at 390 billion won (around $270 million) between 2018 and 2021. Authorities discovered the couple had converted criminal proceeds into cryptocurrency to hide their funds.
After the Supreme Court confirmed Mr. A’s 2.5-year prison sentence, the prosecutors recovered the lost Bitcoins. A spokesperson explained, “It appears the hacker voluntarily returned all the Bitcoin after we froze it on domestic and international exchanges to prevent liquidation.”
The Gwangju District Prosecutors’ Office sold the Bitcoins little by little over 11 days, from the 24th of last month to the 6th of this month, to avoid shaking up the market. By selling gradually, they managed to return the money to the national treasury without causing big swings in Bitcoin’s price. As of writing, according to CoinMarketCap, Bitcoin was trading at $70,873.32, up 4.59% in the last 24 hours.
In addition, the office is launching an internal review to figure out how the Bitcoins were lost and to track down the hacker responsible.
Government scrutiny of digital assets
This incident raises bigger concerns about how digital assets are being protected. Earlier, the National Tax Service came under fire after a press photo accidentally exposed nearly 7 billion won worth of cryptocurrency.
In response, Deputy Prime Minister Koo Yun-cheol ordered a full audit of public institutions’ digital assets and stressed the need for tighter security. He said, “The government will promptly develop and implement measures to prevent recurrence, including strengthening digital asset security management.”
On top of that, South Korea’s leading crypto exchange, Bithumb, is facing possible penalties for breaking anti-money laundering rules. The Financial Intelligence Unit pointed out that Bithumb dealt with unreported overseas operators and didn’t fully check its customers.
While the final decision awaits a sanctions review committee, Bithumb reassured users that trading can continue as usual. However, new members will face some limits on withdrawals.
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