South Korean prosecutors have regained control of more than 320 Bitcoin (BTC) that had disappeared from government custody last year after the assets were unexpectedly transferred back to an official wallet.
What Happened
The Gwangju District Prosecutors’ Office said 320.88 BTC, worth about $21.3 million at current prices, was returned earlier this week.
The cryptocurrency was subsequently moved to a secure account at a domestic exchange managed under state oversight.
The holdings had originally been seized as part of a criminal investigation but were found missing during a routine audit of confiscated assets in January.
Authorities later determined that a phishing attack had compromised credentials linked to the storage wallet, allowing the funds to be withdrawn months earlier.
Officials have not disclosed why the person controlling the stolen Bitcoin sent the funds back.
However, prosecutors had previously asked local trading platforms to block transactions tied to the suspect’s address, a move that may have limited the ability to convert the assets into cash through regulated markets.
Challenges Of Off-Ramping Large Crypto Holdings
The recovery suggests that moving or liquidating a large amount of Bitcoin without access to compliant exchanges can become increasingly difficult and traceable.
Investigators said efforts to identify and arrest the individual involved will continue despite the return of the funds.
Also Read: Glassnode: Without ETF Inflows, Bitcoin Recovery Faces Structural Headwinds
Separate Case Renews Custody Security Concerns
The incident follows another recent breach involving seized digital assets. Police in Seoul disclosed that 22 Bitcoin, valued at roughly $1.5 million, were transferred out of a cold wallet even though the physical device remained in official possession.
That case, involving assets voluntarily submitted during a 2021 investigation, has triggered a new inquiry into how the transfer was executed and who was responsible.
Law Enforcement’s Growing Role As Crypto Custodian
As financial crime investigations increasingly involve digital assets, public agencies are holding larger volumes of cryptocurrency for extended periods.
That shift has effectively turned prosecutors and police into custodians responsible for safeguarding assets that can be worth tens or hundreds of millions of dollars.
While the return of the 320 Bitcoin limits the immediate financial damage, both cases have intensified scrutiny of access controls, key management procedures and internal oversight for government-held wallets.
Investigations into the recovered funds and the missing 22 Bitcoin remain ongoing.
Read Next: DeFi Derivatives Enter U.S. Regulatory Fight With Hyperliquid Policy Center Debut