South Korean Tax Agency Accidentally Exposes Wallet Mnemonic; $4.8 Million in Crypto Assets Stolen

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Real-world assets (RWA) news took a dark turn when South Korea’s National Tax Service accidentally exposed a wallet mnemonic in a press release on February 27. The full phrase appeared in a photo of a Ledger hardware wallet seized during a tax enforcement operation. The wallet contained approximately 810 million KRW in cryptocurrency, but within hours, $4.8 million worth of PRTG tokens were drained. Cryptocurrency experts have criticized the agency for its failure to securely handle digital assets.

BlockBeats report: On February 27, according to Korean media, the National Tax Service of Korea inadvertently exposed the full mnemonic phrase of a seized cryptocurrency wallet in its press materials detailing the results of "on-site inspections of high-value and habitual tax defaulters," with no redaction or blurring applied, leading to suspected hackers transferring the associated assets.


According to reports, the National Tax Service released information on February 26 stating that during on-site inspections of 124 taxpayers with outstanding tax liabilities, approximately KRW 8.1 billion in assets were seized. In "Case 3," four cryptocurrency hardware wallet USB devices were discovered in a drawer at the taxpayer’s residence. The issue is that in the on-site photographs released with the press release, a piece of paper containing the wallet’s recovery mnemonic phrase was clearly visible next to the Ledger hardware wallet devices.


On-chain records from the blockchain explorer Etherscan show that shortly after the mnemonic phrase was exposed (early on the 27th), approximately 4 million PRTG tokens were transferred in three separate transactions to unknown addresses. Prior to these transfers, small amounts of ETH were sent to the relevant addresses to cover gas fees. The transferred assets were valued at approximately $4.8 million (roughly 6.4 billion KRW).


Some scholars have criticized this move as equivalent to "publishing the wallet key," revealing a fundamental lack of understanding by law enforcement regarding the secure management of digital assets.

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