Regulators to Tighten Controls After South Korea’s Tax Agency Leaks Wallet Seed Phrase

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South Korean authorities have initiated a comprehensive review of digital asset custody practices across government agencies after a costly mistake by the National Tax Service (NTS) led to the loss of millions of tokens.

Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol announced that a cross-agency inspection would be conducted to assess how seized cryptocurrencies are stored and managed. The decision follows an incident in which the NTS accidentally revealed the full mnemonic recovery phrase of a confiscated hardware wallet in a press release photo.

The image, published to highlight a tax evasion enforcement action, clearly displayed the wallet’s seed phrase. By doing so, officials unintentionally provided the information needed to access and transfer the funds. Shortly after the photo was made public, unidentified individuals drained roughly 4 million Pre-Retogeum (PRTG) tokens from the wallet.

The seized tokens were worth around 6 billion won, equivalent to approximately $4.8 million. The breach has raised serious questions about internal handling procedures for digital assets obtained through enforcement measures.