South Korea’s National Tax Service (NTS) seized crypto during enforcement actions against 124 high-value tax evaders—and then accidentally handed would-be thieves the keys.
The operation reportedly confiscated digital assets worth about 8.1 billion won (roughly $5.6 million). But when officials later published a press release highlighting the crackdown, the release included photos of seized hardware wallets alongside handwritten notes that exposed wallet seed phrases.
Ledger Nano X Crypto Wallet Signer
A hardware wallet designed to keep private keys offline. The critical backup is the seed phrase—if it’s exposed, the wallet can be taken over without the device.
Check Price on AmazonThat mistake defeats the entire point of cold storage. A seed phrase is effectively the master key: anyone who has it can import the wallet into other software or hardware and move funds without touching the seized device.
According to reporting, an unknown party who spotted the exposed phrases first sent a small amount of ETH to one of the addresses to cover gas fees. From there, they executed three transfers moving roughly 4 million Pre-Retogeum (PRTG) tokens, valued at about $4.8 million at the time—though cashing out that full headline number could be difficult depending on liquidity.
Investigators face an ugly reality: because the seed phrase was published broadly, there may be no narrow pool of suspects. And even when law enforcement can trace funds on-chain, recovery often depends on assets hitting a cooperative, regulated exchange—or on issuer controls that usually don’t exist for most tokens.
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Check Price on AmazonThis isn’t South Korea’s first case of seized crypto going sideways. In a separate incident tied to evidence handling, 22 bitcoin seized in 2021 were later allegedly drained after a recovery phrase leaked to a third party; police have since made arrests, and the BTC stash was recently valued around $1.5 million.
Zoom out and the theme is clear: self-custody is unforgiving, and the risk doesn’t stop at phishing. Criminals have increasingly targeted holders through offline intimidation, and authorities in the U.S. continue to warn about crypto ATM scams—Minnesota lawmakers and local police have even backed a proposal to ban the kiosks outright.
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