What makes the situation stranger is that while the USB device remained with police, the digital assets inside had already been transferred elsewhere.

What happened  and how was it discovered?

The Bitcoin were voluntarily surrendered by suspects during an investigation in November 2021. Because the case was later suspended, the assets were not actively monitored for a long period. That changed only after a separate loss in Gwangju triggered nationwide routine inspections.

During the internal review, investigators found the following: the USB-style cold wallet was still held by police  but the BTC inside was gone.

This detail matters. Since the hardware was not stolen, it suggests the private keys may have been accessed by a third party. Early findings indicate that the wallet password was leaked, enabling unauthorized transfers.

The Gyeonggi Northern Provincial Police Agency has launched a formal internal investigation to clarify the circumstances and rule out any internal involvement. Access logs, key management procedures, and on-chain activity are all under review. For now, no staff members have been publicly accused.

Not a technical exploit human error

Sources close to the case say the Bitcoin were stored on a portable USB device rather than a more robust institutional custody system. There are also indications that the wallet password was exposed during a routine inspection.

This mirrors a pattern seen repeatedly in recent crypto losses: assets are often compromised not through sophisticated hacks, but through social engineering and weak internal controls. Phishing attacks aren’t technical  they’re deceptive. One trusting click, and the consequences can be massive.

A brief side note: claims that 320 BTC seized in Gwangju were lost after investigators accidentally accessed a phishing site helped trigger the broader inspection wave.

Authorities are now reviewing blockchain transaction records to determine whether the missing BTC were sent to external wallets. So far, no recovery has been announced publicly, and details remain limited while the investigation continues.

Seizure of digital assets is becoming institutionalized in South Korea

This incident sits within a larger framework. In South Korea, the seizure of digital assets has gradually become formalized following landmark Supreme Court rulings confirming that cryptocurrencies can be treated as property under the Criminal Procedure Act.

In March 2024, the Gwangju District Prosecutors’ Office also attempted to recover Bitcoin worth approximately 170 billion won in connection with another illegal gambling operation. State capacity is clearly expanding yet this case highlights persistent gaps in custody and internal control.

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Crypto Tax Exemption Period Comes to an End

Until now, residents in Brazil who sold up to 35,000 Brazilian reals (approx. $6,300) in crypto assets per month were exempt from income tax. Under the new regulation, all gains—regardless of transaction volume—are now subject to a 17.5% flat rate.

This change means higher tax burdens for smaller investors, while some high-net-worth individuals may actually benefit. Previously, trades above 5 million reals were taxed up to 22.5%, but with the flat rate, many large investors will now pay less.

Cold Wallets and Offshore Crypto Holdings Are Now Taxable

The reform goes beyond just trading volume. Crypto stored in self-custody wallets and held in foreign exchanges will also be included in the tax regime.

You Might Be Interested In: Elon Musk Talks About the Name of a New Memecoin!

Taxes will be assessed quarterly. Investors are allowed to deduct losses from the previous five quarters, although this loss window will narrow starting in 2026.

Other Financial Instruments and Betting Revenue Also Hit

The changes also impact traditional financial products. Fixed-income securities that were previously tax-exempt—such as Agribusiness and Real Estate Credit Letters (LCAs and LCIs) and Receivables Certificates (CRIs and CRAs)—will now be taxed at 5% on profits.

Meanwhile, the tax on betting revenue has been raised from 12% to 18%.

Proposal to Allow Bitcoin Salary Payments in Brazil

Back in March, Brazilian lawmakers proposed a bill that would allow employers to pay up to 50% of employee salaries in crypto, including Bitcoin.

Full crypto salary payments would only be allowed for foreign workers or independent contractors, and only under conditions regulated by Brazil’s central bank. All crypto salary payments must use official exchange rates from central bank-authorized institutions.

Freelancers will be allowed to receive full payments in digital assets if contractually agreed. Supported currencies include Bitcoin, Ethereum, USDT, and USDC.

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As one of the leading cryptocurrency exchanges, Bybit has been at the center of a major security crisis. Company officials stated that a serious technical collapse in the exchange’s infrastructure allowed hackers to infiltrate the system. This vulnerability compromised Bybit’s security mechanisms, enabling attackers to steal $1.5 billion worth of assets.

You Might Be Interested In: Elon Musk Talks About the Name of a New Memecoin!

How Did the Attack Happen?

According to Bybit’s report, attackers identified security loopholes within the infrastructure and exploited them to gain unauthorized access. Initially appearing as a user account breach, the attack was later revealed to have directly targeted the company’s internal systems. Hackers managed to transfer massive amounts of funds to their own wallets by taking advantage of these weaknesses.

Are Bybit Users at Risk?

Following the large-scale attack, Bybit assured users that their funds would remain secure. The company announced that most of the stolen assets would be covered from its reserves and that user losses would be reimbursed. However, some analysts have raised concerns about how Bybit will manage such a significant financial hit in the long run.

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The post Massive Bybit Hack: $1.5 Billion Loss Explained! appeared first on Coin Engineer.

Differences Between Exchange Platforms and Cold Wallets

The methods of storing your crypto assets are broadly divided into two. On exchange platforms, your assets are held on exchanges. You do not have full control over these assets. In cold wallets, your private keys are completely under your control and stored offline. Ledger Flex is one of the secure solutions among cold wallets.

What’s in the Ledger Flex Box?

When you open the box of the product, Ledger Flex device, Recovery Sheet where you can save your private keywords, Type-C to Type-C connection cable and user manuals welcome you.

How to Set Up Ledger Flex

To manage and set up your Ledger device, download the Ledger Live app on your computer or smartphone. In this guide, we’ll use a smartphone.

1. Open the Ledger Live app and click Get Started.
2. Select Set up your Ledger and choose Ledger Flex.
3. Turn on your phone’s Bluetooth and press the button on the right side of the Flex device to power it on.
4. After a short wait, your phone will detect the device and display it on the screen. Select it.
5. If the codes on your phone and Flex match, tap Yes, they match on the Flex screen.
6. Verify that the device’s software is genuine and up-to-date using your phone. Approve any necessary updates to complete the process.

At this stage, your device has been paired with your phone, and all required updates are complete. Now, let’s move on to the exciting part—setting up your device. Follow these steps:

1. Assign a name to your device using the Set name option, then confirm it by selecting Confirm name.
2. Create a PIN code between 4 and 8 characters to unlock your Flex device.
3. Choose Set up as a new Ledger for a fresh setup.
4. This next step is perhaps the most critical. Write down the 24-word recovery phrase shown on the screen in a secure location. Do not store it digitally, take photos of it, or divide it into parts. Ensure it is protected against theft, hacking, fire, and water damage. Your recovery phrase grants access to your assets. If it is lost or compromised, your assets could be at risk.
5. After recording the words, select them in the correct order on your Flex device to finalize the setup.

Ledger Flex is an innovative wallet designed for the secure storage of your crypto assets, standing out with its touchscreen and ease of use. In the crypto world, security is paramount, and Ledger Flex offers an exceptional experience for its users. If you encounter any difficulties during the setup process, feel free to ask in the comments!

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The recent slump of FTX is a great example of why keeping some or all of your cryptocurrency in cold storage works. When your crypto assets are on an exchange like FTX, you can only access these assets if the exchange can distribute your funds to you. If attackers target or if there’s mismanagement of funds at this exchange, they could make your money disappear.

What is a cold wallet?

A cold wallet is a crypto wallet that is not connected to the internet and stores your private keys offline. There are three types of cold wallets: paper (Paper Wallet), hardware (Hardware Wallet), and sound (Sound Wallet).

Hardware Wallets

Hardware wallets store cryptographic keys offline and range in price from 50 to 150 dollars. Some advanced technology hardware wallets include screens and buttons that can enhance the user experience and require a physical connection with an internet-connected device to make transactions.

Some of the market leaders for hardware wallets are Trezor, Ledger and SafePal, and many modern iterations have simple user interfaces to simplify the asset storage process.

Paper Wallets

Cold wallets are available in many different formats and the paper wallet approach is the most basic to offline crypto storage. Paper wallets are typically documents that store private and public keys and even a QR Code address for storing cryptocurrency offline. Since the keys are generated offline, users can securely transfer crypto to paper wallet addresses, knowing that the keys were never exposed to the internet.

Sound Wallets

As a more unusual way of adopting cold storage of crypto assets, it’s possible to encrypt your private key or your seed phrase’s verbal readout using a CD, USB flash drive or even a vinyl disk, encoding the wallet information in an unlikely manner.

5 Reasons You Should Use a Cold Wallet

Is it really worth locking your cryptocurrency in an offline cold wallet? While there may not be an easy answer to this question, there are several reasons why cold wallets deserve serious consideration.

1. Ensuring Safety from Cyber Attacks

As we mentioned before, cold wallets prevent cyber attacks by securing your cryptocurrency’s private key offline, preventing anyone from gaining access.

Hot wallets generate private keys online and sign each transaction digitally with your private key before sharing it on the blockchain network. This can provide enough information for hackers to exploit security vulnerabilities in the hot wallet provider, for example, in an attempt to gain unauthorized access through crypto phishing scams.

Since it operates completely offline, hackers cannot compromise the cold wallet; however, it’s equally crucial to securely store your hardware wallet in a safe physical location.

2. Full Control of Your Private Keys

Most importantly, cold wallets also give you full control over the security surrounding your private keys and crypto assets. With hot wallets, where you rely on third parties to store your private keys and ensure the security of your assets, this is not the case.

Remember: Here, what matters are your keys, not your money.

3. Easy to Recover

When setting up a hardware wallet, the device generates a unique 12 to 24-word recovery phrase for you. To recover your data in case of wallet damage, loss, or theft, you can purchase a new hardware wallet and utilize your password and keywords with it.

4. Rich Range of Cold Wallet Options

You don’t need to spend heavily on expensive hardware wallets to setup a cold wallet. Using a piece of paper displaying your private keys can be a functional way of keeping your investments offline.

5. Store High Value Investments with Confidence

The most important reason to use a cold wallet is to store your high value crypto investments offline.Although many people engage with cryptocurrencies and lean towards trading, those who hold larger volumes of crypto and cannot afford to incur significant losses in the long run find cold wallets to be ideal.

This doesn’t mean that those with less crypto shouldn’t consider using a cold wallet. The other securities afforded by a cold wallet should not be underrated.

Disadvantages of Cold Wallets

While cold wallets may be the best way to keep your crypto investments safe, there are some notable disadvantages worth highlighting.

• Lack of Functionality: Although your crypto is safe offline, this doesn’t mean much to investors who want to buy and sell crypto frequently. Making transactions in short notice is also more difficult.
• Can be Expensive: Although cheaper hardware wallets start at about 35 dollars, this still represents an entry barrier not found in hot wallets that can be downloaded for free.
• Less Convenience: Many cold wallets offer mobile compatibility where they connect to your device via Bluetooth. However, despite this added accessibility, cold storage is still less convenient compared to hot wallets that can operate as easy-to-use mobile applications.

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A cryptocurrency wallet serves as an application or device designed for the storage of digital currencies. Unlike traditional wallets that house physical coins, crypto wallets are specifically tailored for holding cryptocurrencies. These virtual assets are securely stored within a blockchain and can only be accessed using a private key.

What Is Hot Wallet?

The term hot wallet refers to wallets that are connected to the internet. These wallets can take the form of browser extensions, mobile apps or desktop applications. Hot wallets are particularly convenient for swift transactions. Nevertheless, due to their internet connectivity, these devices and applications come with inherent security risks. Hot wallets are often prime targets for hackers. On the flip side, their online nature grants users various advantages, allowing them to access and transact with their wallets from anywhere as long as there is an internet connection. Consequently, hot wallets provide a more streamlined approach to managing transactions.

What Is Cold Wallet?

In contrast to hot wallets, cold wallets operate without an internet connection. These offline wallets excel in terms of security. Cold wallets offer the most effective means of safeguarding cryptocurrencies against cyber attacks.

Cold wallets, which resemble physical devices similar to USB drives, have gained popularity especially among significant investors. However, due to their lack of constant internet connectivity, we can also acknowledge that cold wallets are comparatively less convenient for everyday usage when compared to hot wallets.

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