South Korea’s Deputy Prime Minister and Minister of Economy and Finance, Koo Yun-cheol, has ordered a cross-agency review of how authorities manage confiscated digital assets after the National Tax Service (NTS) inadvertently exposed a crypto wallet seed phrase in a press release photo on Thursday.
Officials had published an image of a hardware wallet that clearly displayed its full recovery phrase. As a result, roughly 4 million Pre-Retogeum (PRTG) tokens — valued at about 6 billion won (approximately $4.8 million) — were drained from a seized wallet.
In a post on X, Yun-cheol said the government, working with the Financial Services Commission and the Financial Supervisory Service, will conduct a comprehensive review of all digital assets confiscated from delinquent taxpayers and “promptly” reinforce security measures surrounding their custody and management.
Koo Yun-cheol also emphasized that the state does not hold cryptocurrency except for assets obtained through law enforcement actions.
National Tax Service leak exposes custody weaknesses
The review comes after the National Tax Service inadvertently included the full mnemonic recovery phrase of a seized hardware wallet in an official press release photo tied to a tax evasion crackdown. By publishing the seed phrase, authorities effectively granted access to the wallet, allowing unknown actors to drain 4 million PRTG tokens within hours.
The incident is not the first custody-related lapse. South Korean officials previously faced criticism after Seoul’s Gangnam police reportedly lost 22 BTC seized in a 2021 hacking case when the assets were left with a third-party custodian.
The government said the cross-agency inspection aims to “prevent recurrence” of similar failures, highlighting broader vulnerabilities in the public sector’s handling of digital assets as regulators seek to strengthen oversight of virtual assets nationwide.
