Dunamu, the operator of South Korean cryptocurrency exchange Upbit, has been selected as the final contractor for the National Police Agency's Seized Virtual Asset Storage and Management Project. According to the Public Procurement Service's Nara Marketplace, the contract is valued at 267 million won (approximately $193,000) with a one-year contract period. The National Police Agency conducted a comprehensive proposal evaluation on February 2nd, determining Dunamu as the top-ranked comprehensive evaluation candidate and first-priority negotiation partner. The project represents a significant increase from the previous year's tender, which had a budget of 80 million won (approximately $52,900) but failed multiple times due to insufficient participation. After increasing the budget more than threefold and switching to an open competitive bidding method, major digital asset custody operators participated in large numbers, with seven companies engaging in fierce competition including Dunamu, Korea Digital Asset Custody (KDAC), Bidex, Korea Digital Asset (KODA), Hecto Wallet One, DSRV, and AhnLab Blockchain Company.
The evaluation process used a comprehensive scoring method combining 90% technical evaluation and 10% price evaluation, with Dunamu receiving the maximum score of 94.73 points out of 100, broken down as 84.73 on technical evaluation and a full 10 on price. KDAC and Korbit exchange's joint bid finished second with 91.29 points, while Hecto Wallet One ranked third with 87.27 points. The technical evaluation criteria included immediate acceptance of full custody of seized cryptocurrencies, maintenance of a round-the-clock response system, and guarantee of full compensation if assets were lost due to hacking. The evaluation also placed significant weight on operational stability aspects beyond simply storing assets safely, including deposit and withdrawal response systems and loss response systems in the event of incidents. Dunamu's first-place selection was driven by high scores in its 24-hour operational system and security and management infrastructure accumulated through operating Upbit, South Korea's largest exchange.
The contract award has drawn significant criticism from losing bidders, who argue that only companies with Dunamu's market status could meet the stringent requirements. As reported by Cryptopolitan, pure-play crypto custody firms noted that insurance and loss coverage clauses effectively undermined their bids, as the insurance and balance-sheet strength needed to guarantee losses on assets that could reach tens of billions of won annually sat well beyond most pure-play custodians. The police agency insisted it did not line up conditions to favor any firm, stating they "selected the operator through fair competition." Notably, some critics admitted that the conditions made sense for the state, just not for smaller firms looking to make the math work on such an undertaking. The tender process required four attempts before successfully attracting serious applicants, with the first posting drawing no bidders, the second collapsing due to insufficient participation, and the third ending when nobody cleared the 85-point technical threshold.
The selected operator must store virtual assets such as Bitcoin seized by the National Police Agency during investigations at an external specialized institution using stringent security protocols. Assets must be stored in a '100% cold wallet'—a secure storage location completely disconnected from the internet—and a robust account security system must be established and operated, including mandatory two-factor authentication when responsible police officers access the system. This contractor selection is a response measure following consecutive incidents in February where virtual assets seized and attached by the National Police Agency and the National Tax Service were leaked and hacked. As cases of seized virtual assets being lost by investigative agencies have occurred, the need to improve storage systems has grown significantly. The National Police Agency plans to finalize the contractor through subsequent negotiations and contracting procedures.
The contract award comes amid a backdrop of significant security failures by South Korean law enforcement agencies. In January, approximately 320 Bitcoins worth roughly $48 million went missing from the Gwangju District Prosecutors' Office, while in February, 22 Bitcoins worth around $1.5 million vanished from assets seized back in 2021, both cases involving 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, with the volume consistently outrunning their ability to guard it effectively. Industry observers view that while the project amount itself is small, the symbolic effect of gaining external recognition for corporate credibility and security stability is substantial, given that it involves custody of public institutions' virtual assets. There are expectations that custody demand will not be limited to the National Police Agency, as demand for external custody could expand to include investigative and enforcement agencies such as the Prosecutors' Office, the Korea Customs Service, and the Korea Coast Guard, which seize virtual assets during criminal investigations.
