The National Tax Service’s security lapse exposed the mnemonic code tied to confiscated wallets, leading to about 69 billion KRW in digital assets being moved to an unknown account. Authorities say 4 million PRTG coins were siphoned from the wallets following the distribution of a high-resolution image containing the mnemonic. Investigations are focusing on whether the mnemonic was extracted from the press materials, and police have launched a preliminary inquiry while tracing the path of the stolen assets and identifying anyone who had access to the materials.
The incident has cast a harsh spotlight on the broader issue of virtual asset management within South Korea’s public sector. It follows earlier episodes, such as the Gwangju District Prosecutors’ Office losing bitcoin seized as evidence and the Gangnam Police Station reporting the loss of bitcoin valued at 2.1 billion KRW, underscoring vulnerabilities in how seized digital assets are stored and handled. The mnemonic exposure is particularly egregious because it bypasses the security of cold wallets, enabling recovery of coins without the physical wallet.
Police are methodically analyzing the movement of the stolen PRTG coins, using blockchain analytics to trace their path through exchanges and wallets. If identified, the suspect could face charges under the Information and Communications Network Act as well as computer fraud statutes. Experts advocate for dedicated digital asset management teams within agencies, third-party custodianship, or independent audits to ensure best practices and restore public trust in asset handling.
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