South Korea’s National Police Agency has begun transferring cryptocurrencies seized during criminal investigations to Dunamu’s Upbit Custody service under a nationwide overhaul of how police departments store and manage digital assets.
Summary
- South Korea’s National Police Agency has begun transferring seized cryptocurrencies to Upbit Custody after several incidents involving missing Bitcoin held by law enforcement authorities.
- Under the new arrangement, seized assets will be stored in offline cold wallets, with Upbit providing round the clock technical support and covering 100% of any custody losses.
- The nationwide rollout follows Dunamu’s selection as the police custody contractor in August, replacing a system where individual investigators managed confiscated crypto through hardware wallets.
- Previous security failures included a 2021 Gwangju investigation involving 1,798.3 Bitcoin and a separate case in which 22 Bitcoin went missing from Seoul’s Gangnam Police Station.
According to a November 9 report by local newspaper Segye Ilbo, the agency has instructed all investigative departments to use the external custody provider after several incidents in which Bitcoin held by law enforcement authorities went missing.
The police have distributed operating manuals to investigative units and are conducting training to help officers use the new system.
Under the arrangement, cryptocurrencies confiscated during investigations will be transferred to Upbit Custody and stored in offline wallets until they are returned to their owners, provisionally released, or transferred to prosecutors as part of criminal proceedings.
Upbit Custody takes over seized crypto management
The new system places responsibility for storing seized digital assets with Upbit Custody, replacing the previous practice in which individual police departments purchased hardware wallets and managed confiscated cryptocurrencies themselves.
Once assets are transferred to the service, they will be held in cold wallets that remain disconnected from the internet. Physical storage devices will be kept in separate secure facilities operated by the company.
The custody infrastructure uses multi-party computation and distributed key generation, which divide control over cryptographic keys across multiple parties instead of leaving access dependent on a single person.
Dunamu’s custody service uses multi-signature technology, which requires multiple authorizations for transactions, alongside separate wallet arrangements for different cryptocurrencies and storage purposes.
When a criminal case is referred for prosecution, the seized assets will be transferred to an account connected to the prosecution authorities.
Upbit will provide technical guidance to police investigators on transferring cryptocurrencies across different blockchain networks and cover the transaction fees associated with those transfers.
The company will maintain a 24-hour support service for police departments handling seizures, including assistance with asset transfers and custody procedures.
Certain cryptocurrencies will remain outside the arrangement. Privacy-focused assets such as Monero cannot be stored through Upbit Custody and will continue to be managed using separate hardware wallets.
Under the agreement reported by Segye Ilbo, Upbit will compensate the police for 100% of any losses involving cryptocurrencies placed in its custody.
Dunamu secured the police custody contract in August
The nationwide rollout follows Dunamu’s selection as the final contractor for the police custody project on August 7, as previously reported by crypto.news.
The Upbit operator secured a one-year agreement after completing a public procurement process conducted through South Korea’s Public Procurement Service.
Dunamu had initially been selected as preferred bidder on July 8 after competing against other digital asset custody providers.
The company received a technical evaluation score of 94.14 points before completing negotiations and securing the final contract.
During the selection process, some industry participants questioned whether the requirements favored large cryptocurrency exchange operators with established infrastructure.
The tender required bidders to provide immediate custody services, maintain round-the-clock support and guarantee compensation for asset losses.
Police officials defended the selection process at the time, maintaining that the contract had been awarded through fair competition.
Previous Bitcoin losses prompted custody reforms
The decision to outsource custody followed several cases involving cryptocurrencies that disappeared while being held by South Korean authorities.
Previously, individual investigators were responsible for managing hardware wallets and carrying out transfers. Problems with securing mnemonic recovery phrases, which can provide access to cryptocurrency wallets, contributed to unauthorized withdrawals and disciplinary action against responsible officers.
In one case, Gwangju police began seizing 1,798.3 Bitcoin during a 2021 investigation into an illegal gambling website.
According to Segye Ilbo, someone who learned about the seizure used a mnemonic recovery phrase to withdraw funds, leaving investigators able to secure only 320.8 Bitcoin.
The Gwangju District Prosecutors’ Office subsequently experienced a separate incident involving Bitcoin transferred into its custody. The assets were lost through a phishing attack before eventually being recovered.
Another incident involved Seoul’s Gangnam Police Station, where 22 Bitcoin held in a hardware wallet went missing.
The disappearance was confirmed in February 2026 during a nationwide inspection of cryptocurrency evidence management, although the physical wallet remained in police possession.
South Korean authorities subsequently arrested two suspects in connection with the theft.
The missing assets had been held as evidence in an earlier investigation, and their disappearance prompted a criminal investigation into how the funds had been transferred without authorization.
