South Korea Police Triples Custody Budget to Attract Bidders With Billions in Liability
What You Need to Know
- South Korea’s National Police Agency seeks private custodian for seized cryptocurrency after three failed hiring attempts.
- Contract worth 267 million won requires cold storage, 24/7 availability, and full financial liability for losses.
- Agency tripled budget from 83 million won to attract qualified bidders; seven firms submitted proposals.
- Full-liability clause effectively limits competition to large firms capable of covering tens of billions won in losses.
South Korea’s National Police Agency is on its fourth attempt to hire a private custodian for seized cryptocurrency, and this time seven firms have actually shown up to bid. The contract, worth 267 million won ($179,000), would make the winner responsible for holding and managing digital assets confiscated in criminal investigations under terms that include cold storage requirements, 24/7 availability, and full financial liability for any losses, including those caused by hacking.
The agency’s first three attempts in 2025 all collapsed for different reasons: no applicants, a lone bid that procurement rules couldn’t accept, and then a field of candidates that failed to clear the technical evaluation threshold. To break the deadlock, the agency tripled the budget from its original 83 million won. That adjustment attracted Dunamu (Upbit’s operator), KDAC in consortium with Korbit, KODA, BDACS, Hecto Wallet One, Infinit Block, and DSRV. The full-liability clause is the telling detail here: it means the winning firm must be able to cover losses in the tens of billions of won, which is roughly what the police agency handles annually given its jurisdiction. That requirement quietly disqualifies most smaller custody providers regardless of their technical competence.
The clause doesn’t just raise the bar, it effectively writes the shortlist.
Dunamu’s position looks strongest on paper. Recent institutional investments from Hana Bank, Hanwha Investment Securities, and a combined stake purchase by Samsung Securities, Samsung SDS, and Samsung Card have deepened its financial backing, according to Tiger Research. One custody industry official told Seoul Economic Daily that the announcement feels “effectively aimed at Upbit,” though the agency maintains selection will follow fair procurement procedures. The urgency driving all of this is concrete: roughly 320 Bitcoins worth approximately $48 million disappeared from the Gwangju District Prosecutors’ Office during a routine inspection in January, and Gangnam District police separately disclosed the loss of 22 Bitcoins seized in 2021. Both incidents involved USB wallets and failures to secure private keys, the kind of operational failure that professional institutional custody is specifically designed to eliminate.
South Korea’s situation reflects a broader gap that most jurisdictions are still navigating: law enforcement has become a significant holder of digital assets through seizures, but government agencies were not built to manage private key security at scale. The outcome here will matter to other custody providers watching whether governments become a durable institutional client segment, and whether full-liability contracts become the standard ask.
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