Criticism follows as South Korea police picks Dunamu for crypto custody

Firms that sent competing proposals to South Korea’s National Police Agency to win the contract to become the official crypto custodian of the agency’s seized crypto have gone off on a criticism tangent again after Dunamu emerged as the top bid at the end of the process.

The complaints point to how the firm running Upbit, South Korea’s largest crypto exchange, winning the bidding process as vindication for earlier observations that the tender’s terms gave larger exchanges a decisive advantage over custody-first upstarts.

As Cryptopolitan reported in June, pure-play crypto custody firms noted that insurance and loss coverage clauses listed in the procurement database effectively undermined their bids.

Who won the bid for South Korea’s police agency’s seized BTC?

Local reports put Dunamu at the top of the Public Procurement Service’s Nara Jangteo as of Wednesday, July 8. The Upbit operator had a final score of 94.73 points, broken down as 84.73 on the technical evaluation and a full 10 on price.

A joint bid by Korea Digital Asset Custody (KDAC) and the Korbit exchange scored 91.29, good enough for second position. Hecto Wallet One came third with 87.27. 

What Dunamu’s top rank means is that the police agency can finalize deal terms with Dunamu, and other bidders won’t be considered further unless talks fail.

Curiously, the contention from the losing bidders is not exactly about the contract itself, which is worth 267 million won, roughly $193,000, for one year. The real prize is the coveted job of storing and managing all the digital assets that South Korea’s National Police Agency confiscates during criminal investigations.

Why Dunamu’s winning bid is facing criticism

The common pain point across the field is that only a company with Dunamu’s market status could tick many of the boxes that South Korea’s National Police Agency’s bid listed.

Cryptopolitan had reported on conditions such as: 

• Immediately taking full custody of seized assets.
• A round-the-clock response team.
• 100% coverage in any event of losses.

The insurance and balance-sheet strength needed to guarantee losses on assets that could reach tens of billions of won a year sat well beyond most pure-play custodians.

Around the time those complaints were made, the police insisted that it did not line up the conditions to favor any firm or put others at a disadvantage, saying they “selected the operator through fair competition.”

Notably, some of the critics admitted that the conditions made sense for the state, just not for any smaller firm looking to make the math work on such an undertaking.

Why is South Korea looking for someone to keep its seized crypto?

Reaching a winner took the police agency four attempts. According to Cryptopolitan’s earlier reporting, the first 2025 posting drew no bidders, the second collapsed because only one firm applied and left no competitive tender, and the third ended when nobody cleared the 85-point technical threshold.

To pull in serious applicants, the agency lifted the budget more than threefold, from an initial 83 million won to the current 267 million, a 3.2-fold jump year over year.

The fourth round finally attracted seven firms, including BDACS, KODA, KDAC, Upbit’s custody arm, Hecto Wallet One, DSRV, and AhnLab Blockchain Company.

The whole exercise traces back to a run of embarrassing failures. In January, about 320 Bitcoins worth roughly $48 million went missing from the Gwangju District Prosecutors’ Office.

Weeks later, in February, Gangnam police disclosed that 22 Bitcoins worth around $1.5 million had vanished from assets seized back in 2021, Cryptopolitan reported.

Both cases involved USB-based wallets and lapses in protecting private keys. Over five years, South Korean police have seized an estimated 54.5 billion won in crypto, and the volume kept outrunning their ability to guard it.

With Dunamu now first in line, attention shifts to whether the police can close the deal and hand the country’s confiscated coins to a professional custodian before the next audit turns up another gap.