In South Korea, the Gwangju District Prosecutor’s Office converted 320.8 Bitcoins seized from illegal online activities into cash to be recorded as income in the national treasury. A total of 31.59 billion Korean won, approximately 21.5 million dollars according to the current exchange rate, was transferred to the country’s treasury. Instead of quickly selling the seized cryptocurrencies, authorities completed the transactions piecemeal over 11 days to avoid sudden fluctuations in the market.
Short Term Loss of Control Due to Phishing Attack
An unusual development occurred during the process of Bitcoins coming under state control. Authorities were subjected to a phishing attack during a Bitcoin transfer. The asset managers responsible for the funds were misled through a fake website. With this method, an attacker had the chance to move Bitcoins to a different wallet.
Following the incident, investigation teams instantly monitored transactions via the blockchain and sent notifications to both local and international cryptocurrency exchanges. The aim was to block the relevant wallet address to prevent the thief from selling his Bitcoins. Following the measures implemented, the attacker transferred the 320.88 Bitcoins he captured back to a wallet under the control of official authorities on February 19. Two days later, it was announced that all assets were moved to a secure exchange account and partial sales transactions began.
Source: Illegal Online Gaming Investigation
The history of the seized digital assets dates back to an illegal online gaming operation that was found to have occurred between 2018 and 2021. Within the scope of the investigation, it was determined that a total of 390 billion won (approximately 285 million dollars) of transactions were managed through Bitcoin. The Gwangju District Prosecutor’s Office seized cryptocurrency assets within the legal process and transferred these funds to the state treasury.
Crypto Asset Evaluation in Personal Debt Restructuring from the Judiciary
On the other hand, courts in South Korea also considered whether cryptocurrency losses should be included in the calculation criteria in personal debt restructuring processes. Newly established rehabilitation courts in Daejeon, Daegu and Gwangju are preparing new guidelines to keep crypto- and stock-related losses separate when liquidating individual assets. This change aims to treat cryptocurrency losses and other asset value decreases in a similar way.
In the statement made by the Gwangju District Prosecutor’s Office, it was stated that the seized 320.8 Bitcoins were divided and sold at the market price and the income obtained was transferred directly to the country’s treasury.
It is emphasized that potential threats may continue if security protocols are bypassed during the process of converting crypto assets into cash by the state and transferring them to the treasury. Following the incident, it is emphasized that official authorities should take more careful steps regarding asset security.
The process brought to the agenda both the technical aspect of the state’s seizure and sale practices for crypto money and the changing approach to how assets will be classified in the judicial dimension.
