What to Know
- South Korea’s National Tax Service accidentally revealed a crypto wallet recovery phrase in a press release photo.
- Within hours, 4 million PRTG tokens worth about $4.8 million were moved to an unknown wallet.
- Experts say the mistake shows a serious lack of basic crypto security understanding.
A serious mistake by South Korea’s National Tax Service (NTS) has led to the loss of about $4.8 million worth of crypto tokens, according to a local newspaper.
The agency accidentally revealed the recovery phrase of a seized crypto wallet in an official press release photo. Soon after, millions of dollars in tokens were moved out of the wallet by an unknown person. Experts are calling it a “predictable disaster.”
What Happened?
On the 26th, the National Tax Service shared a press release about a large tax investigation. The agency said it had searched 124 high-value and habitual tax defaulters and seized assets worth 8.1 billion won. One case, described as “Case 3,” involved a taxpayer identified only as C. Officers found four USB devices used to store crypto wallets inside a drawer at C’s home.
To show their success, the tax agency released photos of the seized items. The problem? The photo clearly showed a device from the hardware wallet brand Ledger, along with a piece of paper that displayed the wallet’s recovery phrase also called a “mnemonic.” There was no blurring or editing to hide the words.
Why the Recovery Phrase Is So Important
In crypto, a recovery phrase is like the master key to a wallet. It is a set of English words that allows anyone to restore the wallet and access its funds. “It’s like combining your bank password, security card, and ID into one,” experts say. Even without the physical wallet device, anyone who knows the recovery phrase can access the funds from anywhere in the world. By publishing the phrase in a public document, the agency essentially gave full access to the wallet.
Professor Cho Jae-woo of Hansung University strongly criticized the mistake. He said, “If they seized virtual assets, they would disclose the most important mnemonic in a press release that the entire nation can see. This is like advertising to open your wallet and take your money.”
$4.8 Million Moved Within Hours
According to blockchain data shared by Professor Cho, shortly after the press release was published around dawn on the 27th, all 4 million PRTG tokens in the wallet were transferred out. The stolen tokens are estimated to be worth about $4.8 million (around 6.4 billion won).
Data from Etherscan shows that the person behind the transfer first sent a small amount of Ethereum into the wallet. This was likely done to cover transaction fees. After that, the 4 million PRTG tokens were moved in three separate transfers to another wallet. The move appeared planned and careful.
Experts Call It a “Basic Mistake”
Many experts believe this incident could have been easily avoided. Professor Hwang Seok-jin of Dongguk University said, “Taking a picture of a mnemonic code and storing it in a gallery, messenger, or cloud is something you should never do.”
He compared it to taking a photo of a bank security card and uploading it online. “Posting it on the web is essentially the same as saying, ‘Take it all.’” Professor Hwang also explained that recovery phrases should always be written on paper or even metal plates and stored offline. They should never be shared digitally. Experts say this shows a lack of basic understanding of how crypto works.
Bigger Questions Raised
This incident has raised serious concerns about how government agencies handle digital assets. The stolen funds were part of assets seized from tax defaulters. That means the loss may affect public money that was meant to be recovered.
Professor Cho warned that the mistake “has blown the opportunity to recover tens of billions of won in national treasury.” The case also highlights a bigger issue, as governments deal more with crypto, they must understand the technology and follow strict security practices.
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