South Korea’s deputy prime minister and finance minister, Koo Yun-cheol, has ordered a cross-agency review of how government bodies and public institutions handle seized digital assets after the National Tax Service (NTS) accidentally exposed a wallet recovery phrase in a press release photo. The disclosure allowed unknown actors to empty the confiscated wallet within hours.
The NTS published an image of a hardware wallet that revealed the full mnemonic recovery phrase. Using that information, attackers drained roughly 4 million Pre-Retogeum (PRTG) tokens — about 6 billion won (around $4.8 million) — from the seized wallet.
Koo said on X that the government, together with the Financial Services Commission and the Financial Supervisory Service, will review the status and management of all digital assets seized from delinquent taxpayers and “promptly” tighten security controls. He also stressed that the state does not hold cryptocurrencies except those acquired through law enforcement actions.
The episode underscored weaknesses in public-sector safeguards for confiscated crypto. By publishing the full mnemonic phrase, the NTS effectively handed control of the wallet to anyone who saw the image. Authorities have faced similar custody concerns before, including allegations that Seoul’s Gangnam police lost 22 BTC in 2021 after leaving seized funds with a third-party custodian.
The planned inspection is intended to prevent repeat incidents and to identify broader vulnerabilities as officials move to strengthen oversight of virtual assets. Agencies are expected to review storage practices, access controls, recordkeeping, and third-party custodial arrangements to reduce the risk of future loss or exposure.