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Lim Kwang-hyun, Commissioner of the National Tax Service (Photo: Yonhap News) |
[Alpha Biz= Kim Jisun] South Korea’s National Tax Service (NTS) is facing criticism after accidentally disclosing the mnemonic recovery phrase of a seized cryptocurrency wallet in an official press release, an error that may have enabled the theft of digital assets worth approximately USD 4.8 million, according to an exclusive report by Maeil Business Newspaper.
The incident occurred after the NTS distributed a press release on February 26 detailing the results of on-site searches of 124 high-value and habitual tax delinquents, in which it highlighted the seizure of assets worth KRW 8.1 billion. In “Case No. 3,” the agency said it had confiscated four USB devices used to store cryptocurrency wallets from the residence of a delinquent taxpayer.
However, photos released with the press materials clearly showed a handwritten mnemonic recovery phrase—used to restore access to a crypto wallet—alongside a Ledger hardware wallet, without any masking or security processing, Maeil Business Newspaper reported.
In the cryptocurrency industry, a mnemonic phrase effectively grants full control over a wallet, allowing anyone with access to restore the wallet and transfer assets from anywhere in the world, even without the physical device.
Blockchain analysis cited by Maeil Business Newspaper suggests the vulnerability was quickly exploited. According to Professor Cho Jae-woo, director of the Hansung University Blockchain Research Institute, approximately four million PRTG (Pre-Retogeum) tokens stored in the wallet were transferred in full to an unidentified address in the early hours of February 27. The estimated value of the assets is about USD 4.8 million.
On-chain data show that the attacker first sent a small amount of Ethereum (ETH) to the wallet to cover transaction fees, before moving the tokens out in three separate transactions—indicating a deliberate and systematic operation.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
