Upbit operator Dunamu wins bid for South Korea police crypto custody contract

Dunamu, the operator of South Korean cryptocurrency exchange Upbit, has been selected as the preferred bidder for the Korean National Police Agency’s one-year seized digital asset custody contract.

Procurement records published by South Korea’s Public Procurement Service showed that Dunamu ranked first in the bidding process for the project, which will transfer custody of cryptocurrencies seized during police investigations to an external institution. 

As the preferred negotiating bidder, Dunamu will secure the contract if negotiations are completed successfully without requiring talks with lower-ranked participants.

Dunamu leads technical and price evaluation

Scoring released through the procurement platform showed Dunamu receiving the maximum 10 points for its bid price and 84.73 points in the technical assessment, giving it a total score of 94.73. Korea Digital Asset Custody (K-DAC) placed second with 91.29 points, while Hecto Wallet One finished third with 87.27 points.

Valued at 267 million won (about $195,000), the contract will run for one year and cover the storage and management of digital assets confiscated by police during criminal investigations.

Industry participants, however, questioned whether the tender requirements made it difficult for smaller custody providers to compete. 

According to local media reports, the National Police Agency required bidders to immediately accept full custody of seized cryptocurrencies, maintain a round-the-clock response system, and guarantee full compensation if assets were lost due to hacking.

Several industry officials told local media that those conditions, while reasonable for safeguarding government-held assets, were easier for a large exchange operator such as Dunamu to satisfy than for standalone custody firms with fewer resources. 

One custody industry official said competing against a major exchange under those requirements “wasn’t an easy game from the start.”

Evaluation process draws criticism

Some market participants also expressed disappointment with the evaluation process itself. According to local media, an industry official said Dunamu was likely assessed favorably because of its experience operating a 24-hour exchange infrastructure and handling multiple digital assets, but added that a proposed on-site inspection of competing firms’ security systems and operating infrastructure was not included in the evaluation.

The National Police Agency rejected suggestions that the outcome favored a large company from the outset, with local media reporting that the agency said the operator had been selected through a fair competitive process.

The decision follows previous incidents involving the handling of seized cryptocurrencies by law enforcement agencies. Local reports noted that the need for an external custody provider gained attention after Bitcoin seized by the Gwangju District Prosecutors’ Office was lost, while police also later confirmed that seized Bitcoin had gone missing in a separate 2022 incident.

The latest development comes as Dunamu continues to navigate regulatory scrutiny on other fronts. Earlier this month, the company disclosed that the completion of its planned all-stock share swap with Naver Financial had been postponed for a second time until Dec. 31 as several regulatory approvals remain pending.