Dunamu, the operator of South Korean crypto exchange Upbit, was selected as the preferred negotiator for the National Police Agency's seized crypto asset custody service on the 8th. The one-year contract has a budget of 267 million won, tripled from the initial 83 million won after three failed bidding rounds. The police outsourced custody to specialized firms following repeated hacking concerns and management inefficiencies during internal asset handling. South Korea follows a precedent set by the US Marshals Service, which partnered with Coinbase for large-scale seized crypto custody and transactions.
National Police Agency Triples Budget After Failed Bids
The National Police Agency initially announced the custody project with an 83 million won budget but faced three consecutive failed auctions. To ensure profitability for participants and attract major private firms, the agency increased the budget to 267 million won — more than triple the original amount. The procurement was conducted through the Public Procurement Service's open competitive bidding process.
Multiple domestic custody providers participated in the bidding alongside Dunamu, including DSRV, BDACS (Bithumb Custody), and Korea Digital Asset (KODA). While the contract value remains modest, winning a government agency project carries symbolic weight that positions the victor favorably for future public custody contracts with entities such as the Korea Customs Service and local governments.
Custody Contract Requires 100% Loss Compensation Guarantee
The National Police Agency mandated 24-hour uninterrupted operations and 100% compensation for any asset losses caused by hacking or security breaches. These requirements necessitate both financial stability to cover full reimbursement in worst-case scenarios and large-scale human infrastructure to maintain constant monitoring systems during nights and holidays.
The outsourcing decision stems from recurring hacking risks and management controversies during the police's internal custody operations. By delegating to specialized firms, the agency aims to reduce transaction fees and enhance security standards.
Dunamu Competes Against DSRV and KODA for Symbolic Contract
Industry observers expect Dunamu to secure the final contract following technical negotiations and remaining procedural steps. The contract's strategic value lies in establishing credibility for future public-sector custody opportunities rather than immediate revenue scale.
The US Marshals Service, under the Department of Justice, established an official partnership with Coinbase — the largest US crypto exchange — for custody and trading of large-scale seized crypto assets. South Korea's approach mirrors this international model of leveraging private-sector expertise for law enforcement asset management.
FAQ
What did the National Police Agency do on the 8th regarding seized crypto assets?
The National Police Agency selected Dunamu as the preferred negotiator for a one-year seized crypto asset custody service contract worth 267 million won through the Public Procurement Service's open competitive bidding.
Why did the police increase the custody project budget from 83 million won to 267 million won?
The initial 83 million won budget resulted in three failed auctions. The agency tripled the budget to 267 million won to ensure participant profitability and attract major private custody firms capable of meeting stringent security and operational requirements.
