Board of Audit and Inspection Begins Inspection of Seized Virtual Asset Management by Prosecution, Police, and National Tax Service

Gwangju District Prosecutors' Office and Gangnam Police Station Report Losses, National Tax Service Faces Leakage Incident

Prosecution, Police, National Tax Service, and Korea Customs Service Under Inspection

Assessment of the Appropriateness of Seized and Confiscated Asset Management

Storage, Access Authority, and Internal Controls Also to Be Reviewed

The Board of Audit and Inspection has launched an inspection of the management practices for seized and confiscated items by the prosecution, police, National Tax Service, and Korea Customs Service. This measure aims to review the overall digital asset management system after a series of incidents involving the loss and leakage of virtual assets seized or confiscated by investigative and collection agencies.

Yonhap News

On March 4, the Board of Audit and Inspection announced that it has begun monitoring the "Management Status of Seized and Confiscated Items (Focusing on Virtual Assets)" and plans to assess the appropriateness of management practices, with a particular focus on virtual assets. The agencies under inspection include the prosecution, police, National Tax Service, and Korea Customs Service.

This inspection by the Board of Audit and Inspection was prompted by recent incidents related to virtual asset management. Recently, approximately 42.1 billion won worth of virtual assets seized by the Gwangju District Prosecutors' Office and Gangnam Police Station were reported lost. In addition, in February, a separate incident occurred when the National Tax Service, while promoting its achievements in seizing virtual assets, exposed a master key that led to the theft of about 6.9 billion won worth of seized assets.

Earlier, on February 13, the police announced that they had recently discovered that 22 Bitcoins, which had been voluntarily submitted and stored at Gangnam Police Station around November 2021, had been leaked externally. The police estimated the value of the lost assets at approximately 2.1 billion won, based on the market price at the time. Even before this incident became public, the police had already been inspecting the management status of virtual assets at local police stations in connection with the loss of 320 Bitcoins (valued at 31.2 billion won at the time) that had been seized and stored by the Gwangju District Prosecutors' Office.

The National Tax Service also officially acknowledged and apologized for a virtual asset leak incident on March 1. On February 26, during a briefing to promote its field seizure achievements against delinquent taxpayers, the National Tax Service revealed that information on a delinquent taxpayer's virtual assets had been leaked and subsequently apologized. The agency stated that it would undertake a comprehensive overhaul of manuals for the seizure, storage, and sale of virtual assets, and would pursue both external security audits and enhancements to internal controls.

In response, the government has also launched a follow-up inspection. On March 1, Vice Prime Minister and Minister of Economy and Finance Koo Yooncheol announced that the government and public institutions will inspect the current status and management practices regarding digital assets held or managed due to seizures or confiscations. The police also began a preliminary internal investigation into the outflow of virtual assets immediately after receiving a case referral from the National Tax Service.

This monitoring by the Board of Audit and Inspection is expected to become an opportunity to establish new standards for managing seized and confiscated virtual assets, going beyond simply addressing each agency's individual incidents. Unlike physical evidence, in the case of virtual assets, the management of wallet access information and recovery keys is crucial. As such, experts point out that a comprehensive overhaul of management systems is inevitable, covering not only storage procedures but also transfer of custody, review of public materials, and security controls.

This content was produced with the assistance of AI translation services.