The de facto operator of a virtual asset company accused of siphoning off 22 bitcoins kept by the Seoul Gangnam Police Station has been arrested.
According to legal sources on the 28th, the Uijeongbu District Court issued an arrest warrant for a man in his 40s surnamed Lee, the de facto operator of a virtual asset company, on charges of violating the Act on Promotion of Information and Communications Network Utilization and Information Protection and fraud using computers under the Act on the Aggravated Punishment of Specific Economic Crimes, citing flight risk and the possibility of evidence destruction.
As for A, the chief executive of the virtual asset company who was also sought for a warrant, the court rejected the arrest warrant, saying there was no risk of evidence destruction or flight.
They are accused of leaking and diverting 22 bitcoins kept at the Gangnam Police Station in May 2022.
The virtual asset company run by Lee and others reported to police in 2020 that coins they had issued and were holding had been hacked. During the investigation, police identified an account of a third party whose identity had been stolen and received 22 bitcoins from this third party on a voluntary basis, which they kept in custody.
However, instead of using its own offline virtual currency wallet, a "cold wallet," the police kept them in the cold wallet owned by the company that had requested the hacking investigation.
Lee, who knew the "mnemonic code," the recovery passphrase for the cold wallet, is believed to have restored the bitcoins and then disposed of them. A mnemonic code is a kind of "master key" that can recover lost virtual assets.
At the time, the bitcoins were worth about 1 billion won, and they were reportedly all sold to resolve the company's management difficulties.