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- South Korea’s tax agency exposed a wallet key, enabling hackers to steal $4.8M in crypto.
- Hackers drained 4M PRTG tokens after a press photo revealed the full wallet recovery phrase.
- Experts blame the incident on basic security failures and warn against digital mnemonic storage.
The South Korean crypto security system encountered a major security threat when the National Tax Service revealed information on a wallet seizure key. This information was revealed in an official press release photo, which led to hackers stealing assets worth $4.8 million in hours.
The incident took place on February 26. The Blockchain Research Institute at Hansung University verified that the image depicted assets seized from habitual tax delinquents. One of the assets belonged to a rich taxpayer identified as “Case 3.” The image showed a Ledger hardware wallet and its corresponding mnemonic phrase.
That is the master key for the wallet, providing complete access to the funds stored in the wallet. Anyone who possesses the recovery phrase is able to transfer the funds without restrictions. The situation created an immediate security risk.
Crypto Security Failure Enables $4.8M Theft
The hackers were quick in their actions. Professor Cho Jae-woo stated that the attackers withdrew 4 million PRTG tokens in three separate transactions.
The tokens had an estimated value of $4.8 million. The hacker sent a small amount of Ethereum, used for transaction fees, first. Then, the hacker transferred the PRTG tokens to an unknown destination.
On-chain data confirmed the sequence of movements. Analysts described the theft as preventable. They cited the mistake of handling sensitive information. They described the leak as a basic failure in crypto security management by public authorities.
Experts also cited improper storage techniques. Professor Hwang Seok-jin of Dongguk University said improper storage techniques. He cited the mistake of photographing the mnemonic code.
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He stated that the storage of the information in a gallery, messenger, or cloud service creates severe risks. He compared the mistake to photographing the security card of a bank.
Offline Security Concerns Rise
Both professors emphasized the importance of offline storage. They cited the storage of the keys on paper or metal. The keys were never being stored digitally. They argued about the importance of basic precautions that could have prevented the theft.
However, the case intensified concerns about crypto handling within South Korean institutions. This incident followed another case reported earlier in the month. The Gangnam Police Station confirmed that 22 Bitcoins went missing from its custody. The Bitcoin had been seized in 2021.
Authorities said the Bitcoin disappeared from a cold wallet. They reported no signs of external hacking. The loss was discovered during a nationwide audit. That audit came after a similar lapse was found at the Gwangju District Prosecutors’ Office.
These incidents renewed debate about crypto security standards. They also raised questions about asset protection in official custody. The events highlighted the risks linked to mishandling sensitive information in the crypto sector.
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