Dunamu leads seven-firm race for South Korea's seized crypto custody contract

Dunamu, the operator of the Upbit exchange, is locked in a seven-way race to become the official custodian of the seized Bitcoins as South Korea’s National Police Agency tries to move past the occasional crypto losses that have embarrassed the nation’s highest agencies since last year. 

According to local reports from South Korean media, at least six other companies will be submitting competing bids against Dunamu’s. 

The winning bid will become the private partner of the police agency under a 267 million won ($179,000) contract, with responsibility to hold and manage cryptocurrency seized in criminal investigations, and that’s according to procurement records posted on the government’s KONEPS platform.

South Korea’s National Police Agency has tripled its budget 

South Korea’s National Police Agency has advertised the same role on three previous occasions in 2025 without landing on a suitable candidate for different reasons. 

There were no applicants for the role during the first posting period. The second time around, the process failed because there were no competing tenders against the lone submitted bid.

None of the firms that applied for the third posting cleared the 85-point technical evaluation threshold. Hence, this current $179,000 contract is the police agency’s fourth attempt to outsource custody of confiscated digital assets. 

To avoid another repeat of the first three rounds’ failures, the police agency has raised the project budget more than threefold from the 83 million won it originally planned to 267 million won now. 

National Police Agency targets applicants of Dunamu’s stature

A police spokesperson told Seoul Economic Daily that the latest numbers were “intended to improve the profitability for participating bidders and encourage participation by private firms such as large cryptocurrency exchanges.”

Even then, not everyone agrees that it is a great offer. Smaller custody firms still believe that the contract carries prohibitive requirements. 

What does South Korea’s National Police Agency want? 

• The winning operator must store all assets in cold wallets disconnected from the internet for the full one-year term. 
• They must maintain a round-the-clock response capability. 
• The private firm it chooses must accept full financial liability for any losses, including those caused by hacking or force majeure.

Despite the pushback, the improved terms and standing requirements were apparently good enough for Dunamu, Korea Digital Asset Custody (KDAC), Korea Digital Asset (KODA), BDACS, Hecto Wallet One, Infinit Block, and DSRV, who have all reportedly submitted proposals. 

KDAC entered as a consortium with exchange operator Korbit, taking advantage of a contract provision allowing joint ventures of up to five members with minimum 10% stakes.

Does the police agency’s contract favor Dunamu and Upbit?

According to the terms of the police agency contract and the kinds of cases it has jurisdiction to handle, seized assets could easily be in the tens of billions of won every year. So even though they can apply, pure-play custody providers and smaller exchanges know they don’t have the insurance coverage or financial muscle to cover full compensation in the case of losses, as per the contract’s terms. 

“There is talk that this bid announcement is effectively aimed at Upbit, and it is true that this is discouraging,” one custody industry official told Seoul Economic Daily.

However, the police agency insisted that “an operator will be selected through fair competition” in accordance with procurement law.

However, the stars appear to be aligning for Dunamu, with its financial position becoming even stronger in recent months after institutional investments from Hana Bank, Hanwha Investment Securities and a combined 4% purchase by Samsung Securities, Samsung SDS, and Samsung Card, according to Tiger Research.

South Korea needs professional crypto custody help

The urgency behind outsourcing custody stems from a string of embarrassing losses. In January, roughly 320 Bitcoins, worth approximately $48 million, went missing from the Gwangju District Prosecutors’ Office during a routine inspection, Cryptopolitan reported. 

Weeks later, Gangnam District police disclosed the loss of 22 Bitcoins valued at around $1.5 million from assets seized in 2021. Both incidents involved USB-based wallets and failures to secure private keys.

Over the past five years, South Korean police have seized an estimated 54.5 billion won in cryptocurrency, primarily Bitcoin and Ether, according to estimates cited by CoinMarketCap. The growing volume of confiscated assets has made the lack of professional custody infrastructure a pressing operational gap.

A custody industry source told Daehan Kyungje that, based on previous government procurement timelines, the winning bidder could be announced within a few weeks. BDACS, one of the bidders, claims a 26% share of South Korea’s institutional custody market by assets under management.

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