South Korea’s tax agency leaked cryptocurrency master key – and it was stolen twice

South Korea’s National Tax Service (NTS) is facing intense scrutiny after a private security key was leaked. This error led to the cascading theft of four million seized PRTG tokens (approximately $4.8 million).

This chaos raises serious questions about whether the Korean government is capable of securely managing the digital assets it seizes.

Comedy of errors

The incident began on February 26 during a press conference on high-value tax arrears. NTS shared photos of confiscated USB wallets in cold storage to show their successful implementation. However, these images inadvertently included a “remember code,” which is a 24-word master key used to access digital assets.

According to blockchain data and police reports, PRTG tokens were stolen Twice in 24 hours. The first hack happened earlier on February 27. Someone claiming to be an ordinary investor used the exposed code to drain the wallet.

In a surprising development, this “first hacker” contacted the police and the media on February 28. He made a confession, saying that he took the coins “like collecting waste paper” because they were so easy. He claimed to have returned the entire 4 million PRTG tokens to the NTS wallet shortly after.

The recovery did not last long. Just two hours after the return, a second entity targeted the same vulnerable wallet. This second actor managed to transfer the entire balance to a wallet that had been flagged for “fake phishing” activity.

Systemic failures in asset management

Security experts have criticized NTS for failing to secure the recovered funds. The agency did not transfer the assets to a new secure wallet after the initial hack. This allowed the second thief to use the same exposed recall code.

The NTA said it could not provide details due to the ongoing investigation. However, they confirmed that no other administrative errors occurred during the second transfer.

The stolen assets, PRTG, mainly trade in a single exchange, MEXC. Experts point out that the $4.8 million valuation is purely theoretical, as the market is illiquid. “The real verifiable value is probably only a few thousand dollars,” he said Professor Cho Jae-woo From Hansung University. Any attempt to liquidate this large volume will cause the price of PRTG to collapse immediately.

The government apologizes and responds

The National Transport Authority issued an official apology on March 1, accepting full responsibility.

“This is undoubtedly the fault of the National Tax Authority,” the agency said. It is guilty of violation on the discarded provision of original images to the media containing sensitive data. The agency has promised an external security audit and stronger pre-release review procedures.

The National Transport Authority has requested a police investigation, and the National Police Agency’s Cyber ​​Terrorism Response Unit has opened a preliminary investigation. The police are tracking which media received the high-resolution memory images and who had access to them.

In recent months, The country’s prosecutors temporarily lost control of 320 bitcoinsWhile a police station discovered 22 bitcoins missing from a safe. All three of Korea’s top investigative and enforcement agencies have now faced high-profile failures in seizing cryptocurrencies. Analysts say law enforcement agencies must quickly improve their technical efficiency and operational controls, as criminals increasingly launder proceeds via cryptocurrencies.