South Korea tax service reveals crypto wallet recovery phrase in press release, seized tokens moved in suspected breach: report

South Korea's National Tax Service (NTS) inadvertently disclosed the recovery phrase for a seized cryptocurrency wallet in a public press release photo. The photo, intended to detail asset seizures from tax delinquents, clearly showed the mnemonic phrase for a Ledger cold wallet alongside the device.

Shortly after the exposure on February 27, 4 million Pre-Retogeum (PRTG) tokens, valued theoretically at about $4.8 million (6.4 billion won), were fully transferred from the wallet to an unknown address. Onchain data confirmed the thief deposited a small amount of ETH for gas fees before moving the tokens.

Experts heavily criticized the NTS for this security failure, comparing the public release of the phrase to advertising the wallet was open for theft. They stressed that recovery phrases must never be digitized or exposed online. This incident follows other recent crypto custody lapses involving South Korean authorities, including the loss of seized Bitcoin linked to phishing and another case where 22 BTC was drained from a police-held cold wallet.

(Source：The Block)