South Korea’s National Tax Service (NTS) is moving to outsource custody of confiscated cryptocurrency after an operational error led to a high‑value loss. On Feb. 26 the agency published an image in an official release that showed a Ledger cold wallet together with an unblurred mnemonic seed phrase; that exposure enabled unauthorized transfers of seized tokens, reportedly totaling about $4.8 million.
ZDNet Korea, citing informed sources, reports the NTS is preparing selection criteria and plans to appoint a private custody provider, targeting a decision in the first half of 2026. Prospective vendors will be assessed on security protocols, company scale and whether they carry insurance consistent with South Korea’s Virtual Asset User Protection Act.
The shift toward third‑party custody is part of a broader effort to professionalize how authorities handle digital assets after multiple custody failures exposed procedural weaknesses. A newly formed task force will lead the provider selection and drive upgrades to digital asset management. The group is developing operational manuals that cover the full lifecycle of seized assets—from seizure through secure storage and eventual liquidation—along with risk assessments and staff training programs. Officials are also preparing to create a dedicated division to centralize crypto responsibilities that are currently split across several departments.
The NTS incident followed a separate reported loss by Seoul’s Gangnam police, which allegedly misplaced 22 BTC seized during an investigation. Those incidents prompted an interagency review: on March 1 Deputy Prime Minister and Minister of Economy and Finance Koo Yun‑cheol announced a cross‑agency probe into the government’s management of seized digital assets.
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