Korean Tax Authority leaks crypto wallet seed phrase, $5 million worth of digital assets instantly stolen

On March 3rd, it was reported that Korean tax authorities accidentally leaked the mnemonic phrase for a suspect’s cryptocurrency wallet, resulting in the theft of digital assets worth approximately $5 million. The incident occurred when the National Tax Service (NTS) released a press statement, and an unintended photo included a handwritten mnemonic phrase, allowing the thief to access the wallet and transfer the funds.

The stolen assets mainly consisted of Pre-Retogeum, a small-cap altcoin with a market value of about $13 million. Zhao Zaiyu, director of the Blockchain Research Institute at Seoul University, stated that Korean officials lack a basic understanding of how cryptocurrencies operate, and such leaks highlight vulnerabilities in the government’s digital asset management. Earlier this year, prosecutors lost and recovered $20 million worth of Bitcoin, and later, police reported a $1.4 million Bitcoin loss, indicating frequent security management issues.

On March 1st, the NTS announced that they are working with law enforcement to recover the leaked crypto assets and stated that the hacker was “merely curious.” Officials emphasized that they did not realize the attached image in the press release contained sensitive information and apologized to the public for the concern. Deputy Prime Minister and Minister of Strategy and Finance Koo Yun-cheol said the government will review digital asset management procedures and implement preventive measures to avoid similar incidents in the future.

This incident has raised concerns about the government’s ability to manage digital assets and serves as a reminder for investors to prioritize the security of mnemonic phrases and private keys. As global regulation of cryptocurrencies tightens, this event in Korea may become a significant case for government and public scrutiny of digital asset security.