Upbit operator Dunamu has been chosen to safeguard cryptocurrencies seized in criminal investigations by South Korea’s National Police Agency, marking a significant shift in how law enforcement in the country manages digital assets.
Under a new one-year agreement, Dunamu will provide custody services through its specialized platform, Upbit Custody, after emerging as the top candidate in a public, competitive bidding process overseen by the government’s Public Procurement Service.
Dunamu wins national police tender
Dunamu announced on August 7 that it had been officially selected as the final contractor for the National Police Agency’s project to store and manage confiscated digital assets. This decision came after the company completed technical negotiations that followed its earlier designation as the preferred negotiating bidder.
The procurement process started earlier in the year, and Dunamu initially secured preferred bidder status on July 8. Following additional evaluation and negotiations, the company was confirmed as the final winner of the tender, meaning that cryptocurrencies seized in police investigations across the country will now be placed under its custody platform for at least the next 12 months.
Procurement records show that the contract was awarded via an open competitive tender. Dunamu received the highest technical evaluation score of 94.14 during one stage of the process and later achieved a combined score of 94.73 points-full marks for its bid price and 84.73 points for technical competence-cementing its lead over rival bidders.
Korea Digital Asset Custody (K-DAC) finished in second place with 91.29 points, while Hecto Wallet One placed third with 87.27 points. The contract is valued at approximately 267 million won, or about $195,000, covering one year of custody and management of digital assets seized in criminal cases.
How seized crypto will be stored
Under the agreement, all cryptocurrencies confiscated by the National Police Agency during investigations will be deposited into Upbit Custody, Dunamu’s institutional-grade digital asset storage service.
Dunamu emphasizes that Upbit Custody operates a 24/7/365 monitoring system designed to ensure no interruption in custody operations. The platform’s infrastructure is built around a fully offline security model: assets are stored in 100% cold wallets that are completely isolated from the public internet, significantly reducing exposure to online attacks.
The company says its custody environment incorporates several advanced cryptographic and security mechanisms, including:
– Multi-Party Computation (MPC)
– Distributed Key Generation (DKG)
– Multi-signature authorization
– Segregated wallets by asset type and purpose
This architecture is designed to minimize the risks associated with a single compromised private key and to allow law enforcement to safely segregate assets connected to different cases, defendants, or investigative stages.
A Dunamu spokesperson noted that the firm intends to leverage its security technology and operational controls to support the reliability of South Korea’s public safety systems and the broader digital policing framework.
Heightened scrutiny after previous crypto losses
The police custody project emerges against a backdrop of growing concern over how South Korean authorities handle digital assets seized during investigations.
In February, the Gangnam Police Station in Seoul confirmed that 22 Bitcoin-worth around 2.1 billion won at the time, or roughly $1.6 million-had mysteriously vanished from police control. The coins had been voluntarily handed over to authorities during a 2021 investigation, but a nationwide review later revealed that the assets had been transferred out of the designated storage wallet without authorization.
What alarmed investigators further was that the physical cold wallet device used to hold the Bitcoin was still in police possession. This suggested that someone had either accessed or duplicated the private keys despite no apparent breach in the physical storage of the hardware itself.
The incident prompted the Gyeonggi Northern Provincial Police Agency to launch an internal probe, examining access logs, key management practices, and blockchain transaction histories to determine how the funds were removed and who might be responsible.
Even before the Gangnam case, questions had already been raised about the security of digital assets held by law enforcement, following earlier incidents involving missing or mishandled cryptocurrencies at other prosecutorial or investigative bodies. Those episodes contributed to growing pressure on authorities to standardize and professionalize their digital asset custody practices.
Debate over tender requirements and fairness
The terms of the police tender drew criticism from some within the custody industry. According to local coverage of the process, bidders were required to:
– Immediately accept custody of seized cryptocurrencies
– Maintain a round-the-clock response and monitoring system
– Guarantee full reimbursement if assets were lost due to hacking or other security breaches
Industry figures argued that such requirements inherently favored larger market participants-particularly major exchanges with pre-existing infrastructure-over smaller, specialized custody providers. One official described entering the contest under those conditions as “difficult from the outset,” given the scale of systems, staffing, and capital needed to meet the obligations.
Despite these concerns, the National Police Agency rejected claims that the result was predetermined or biased. Officials asserted that the final selection was based on a fair and transparent evaluation of price and technical capability within the framework of the public procurement system.
Why police are turning to professional custodians
The decision to outsource seized-asset storage to a major platform like Upbit Custody reflects a broader trend: law enforcement agencies increasingly recognize that managing cryptocurrencies safely is a specialized task.
Traditional evidence lockers and physical safes are not sufficient for digital assets, where risk factors include:
– Sophisticated cyberattacks on online wallets
– Internal abuse or mismanagement of private keys
– Human error during transfers and key handling
– Complexity of managing multiple blockchains and tokens
By partnering with a custodian that already runs industrial-scale infrastructure, the police aim to reduce these risks, implement standardized processes, and simplify audit trails. Professional custodians also typically offer clear segregation of duties, multi-step approval workflows, and tamper-evident logging-features that can be invaluable during internal investigations or court proceedings.
Implications for criminal investigations and courts
Centralizing seized-asset storage with a single, specialized provider could streamline how digital evidence is handled in criminal cases. Investigators, prosecutors, and courts may benefit from:
– Consistent documentation of when and how assets were seized
– Clear records of all movements of the funds while in custody
– Enhanced ability to demonstrate chain-of-custody in court
– Reduced disputes over responsibility in case of losses
For defendants and victims, professional custody may also improve transparency. If misappropriation or mishandling occurs, blockchain transaction histories combined with custodian logs could make it easier to trace responsibility compared to ad hoc, internally managed solutions.
Strengthening public trust in digital policing
High-profile losses such as the missing Bitcoin at Gangnam Police Station have damaged confidence in the authorities’ ability to manage digital assets. The new contract with Dunamu is likely intended not only to patch operational weaknesses but also to send a signal that law enforcement is modernizing its approach to crypto.
By adopting cold-storage infrastructure, multi-signature setups, and rigorous operational security, the police can argue that they are aligning their practices with recognized industry standards. This may be particularly important as the volume and value of seized cryptocurrencies grow alongside the broader adoption of digital assets.
Furthermore, having clear contractual obligations-such as compensation for hacking-related losses-introduces an additional layer of accountability that was often absent when agencies attempted to manage wallets internally.
Competitive pressure on other custodians
The outcome of the tender also has implications for the wider digital asset custody market in South Korea. While K-DAC and Hecto Wallet One did not win this contract, the high-profile selection process highlighted what regulators and large public institutions now expect as a baseline:
– Robust 24/7 monitoring
– Proven cold-storage architecture
– Advanced cryptographic key-management techniques
– The financial capacity to stand behind indemnity or compensation commitments
Smaller or emerging custody firms may need to invest heavily in infrastructure and compliance if they want to compete for future government or institutional mandates. At the same time, the visibility of this contract could encourage more regulated players, such as banks or fintech companies, to enter the custody space with institutional-grade offerings.
Possible model for other government agencies
If the partnership between the National Police Agency and Dunamu proves effective, it could serve as a template for other branches of government that handle digital assets, such as prosecutors’ offices, tax authorities, or financial regulators.
Centralizing or standardizing custody arrangements across agencies could:
– Reduce fragmentation in how seized assets are handled
– Lower the risk of policy gaps or inconsistent security practices
– Simplify cross-agency investigations involving digital assets
– Provide a unified framework for audits and parliamentary oversight
Over time, this could evolve into a nationwide standard for public-sector crypto custody, where only providers meeting stringent technical and security benchmarks are eligible to hold government-controlled digital assets.
A step toward more mature crypto regulation
While the contract itself is focused on seized assets, it sits within a larger evolution of South Korea’s digital asset regulatory landscape. As the country tightens rules on exchanges, market manipulation, and investor protection, the ability of public institutions to competently handle cryptocurrencies becomes increasingly important.
Effective custody of seized assets helps ensure that enforcement actions are meaningful: if authorities cannot securely hold what they confiscate, penalties lose much of their deterrent power. The deal with Dunamu therefore contributes to a more credible, enforceable regulatory environment, where both legitimate market participants and would-be offenders better understand the consequences of their actions.
In that sense, the National Police Agency’s move to professionalize crypto custody is not just a technical or operational update-it is a cornerstone in building a functioning, trustworthy framework for digital asset enforcement in South Korea.