The South Korean National Tax Administration came forward with a significant security vulnerability in an official press release. In the post, the recovery statement of a crypto wallet seized for tax evasion was accidentally disclosed. Following this development, it was seen that millions of dollars of digital assets in the wallet were transferred to different addresses with on-chain data.
Security vulnerability and transfers
The National Tax Office presented to the public photographs of hardware wallets seized from some people who owed high amounts of tax. In one of the images, the recovery phrase used to restore the wallet was published without censorship. In crypto systems, such expressions are keys that provide full access to a wallet.
Following the sharing, on-chain records revealed that approximately four million Pre Retogeum (PRTG) tokens were transferred to other addresses in several transactions. The market value of the total transferred assets was recorded as approximately 4.8 million dollars. According to Etherscan data, a small amount of Ether was first deposited into the wallet to cover transaction fees, then all tokens were moved in three separate transactions.
Blockchain movements and expert comments
Blockchain analysis companies pointed out that the transactions in question were carried out immediately after the press release. It was emphasized that at this time the wallet can only be used by a person who has access to the recovery phrase.
Security experts in the industry for a long time point out that storing recovery statements digitally or as photographs poses a great risk. However, in this case, such a security vulnerability in the official communication channels of the government institution brought to the fore the inadequacy of crypto storage standards in public institutions.
Digital asset management of institutions is being discussed again
The incident also highlighted the operational risks faced by public institutions in confiscation processes for digital assets. With cryptocurrencies increasingly being seized in criminal or tax cases, secure storage of private keys and recovery phrases is critical to infrastructure.
The National Tax Office has not yet made an official statement as to whether the tokens in the wallet are irreversible.
Meanwhile, South Korea is preparing to impose stricter controls on online investment promotions. According to new legal regulations, those who produce content in the digital asset and stock markets will be required to publicly disclose their financial interests and collaborations.
