The South Korean government is launching an emergency investigation into the management of seized cryptocurrency after the National Tax Administration (NTS) accidentally disclosed the access key to a digital wallet. The breach allowed unknown people to steal millions of dollars worth of crypto within hours.
Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol announced that the government, together with the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS), will immediately tighten the security of seized digital assets.
Hardware wallet recovery sentence accidentally published
The incident took place after the NTS issued a press release about a successful action against tax evasion. The post shared a photo of a hardware wallet, a physical device that can store cryptocurrencies offline.
However, the full recovery sentence was visible in the image. A recovery phrase is a string of words that provides access to a crypto wallet. Anyone who has this sentence can manage and transfer the associated digital assets.
The error was exploited shortly after publication. Unknown persons managed to transfer approximately 4 million Pre-Retogeum (PRTG) tokens to other addresses. The value of the tokens is approximately 6 billion South Korean won, equivalent to about 4.8 million dollars.
South Korean government announces stricter controls
A full review of all digital assets seized by the government in tax defaulters and other criminal cases is being conducted, according to Vice Prime Minister Koo Yun-cheol. This involves looking at both storage and internal control procedures.
The minister emphasized that the South Korean state itself does not hold cryptocurrencies for investment purposes. This only concerns digital assets seized through law enforcement.
With the tightened measures, the government wants to restore confidence in the management of crypto by government agencies.
Previous loss of 22 bitcoin increases pressure
The leak at the tax authorities is not the first incident involving seized crypto in South Korea. Earlier, police in Seoul’s Gangnam district lost 22 bitcoin. These digital coins had been seized in a hacking investigation in 2021, but disappeared after being entrusted to a third-party custodian.
The back-to-back incidents expose broader weaknesses in the supervision of digital assets within the public sector.
South Korea is working on stricter crypto regulation
South Korea is among the largest and most active crypto markets in the world. The government has been working for some time on stricter regulations and a strengthened supervisory framework for virtual assets.
According to analysts, the recent security breach underlines that not only crypto companies, but also government institutions themselves must meet high security standards. The ongoing investigation should clarify what structural adjustments are needed to prevent recurrence.
With the tightened controls on seized cryptocurrency, South Korea is trying to limit further reputational damage and financial loss.
Source: https://newsbit.nl/zuid-korea-verliest-miljoenen-aan-crypto-na-lek-van-herstelzin-door-belastingdienst/
