South Korean tax authorities lost $4.8 million in seized cryptocurrency after showing the opening phrases of the relevant wallets in a photograph covering the February 26 event.
The cryptocurrency was snapped up immediately after the National Tax Service (NTS) shared a photo that included hardware wallets and their secret phrases. The service apologized for the incident, Asia Business Daily reported on Sunday.
“In an effort to provide more vivid information, we did not realize that confidential information was included and inadvertently provided the original photo,” the tax office said. “This is entirely the fault of the National Revenue Service (NTS), without any excuse.”
This is at least the second time something like this has happened in the country. South Korean authorities faced scrutiny over a separate breach in which Seoul’s Gangnam police allegedly lost 22 BTC (about $1.5 million) in a hacking case in 2021 after leaving the funds and seed money with a third-party custodian. The perpetrators of that robbery were recently arrested.
The new case involves a taxpayer who owed NTS capital gains tax, which led to the search of his home. Authorities took control of at least four wallets of hardware and cash. They then photographed the seized items, which included at least two opening sentences, and shared the clear photo publicly.
The NTS requested police intervention to recover the stolen cryptocurrency. The tax authority also revealed plans to conduct an external review of its overall security system and review the entire manual for the process from seizure to sale of virtual assets.
Koo Yun-cheol, South Korea’s vice prime minister and minister of finance and economy, confirmed the leak in an X post on Sunday.
Koo said several government agencies, including the Financial Services Commission and the Financial Supervisory Service, would investigate the breach. He also said they would examine how government agencies and public institutions confiscate and manage digital assets to prevent recurrence.
