In a catastrophic security lapse, South Korean authorities have inadvertently allowed the theft of nearly $4.8 million in cryptocurrency after accidentally publishing a wallet’s recovery phrase online. The incident occurred on February 26, 2026, when the National Tax Service (NTS) issued a press release intended to showcase its successful crackdown on high-value tax evaders. To provide the public with “vivid information” about the raid, the agency included high-resolution photographs of seized assets, including a Ledger hardware wallet. However, the officials failed to redact a handwritten note visible in the photos that contained the 24-word mnemonic seed phrase—the master key to the digital funds.
The fallout was instantaneous. Within hours of the press release going live, blockchain observers noticed unauthorized activity as an unknown individual used the exposed seed phrase to gain full control of the wallet. On-chain data revealed that the “digital thief” first deposited a small amount of Ethereum to cover network gas fees before draining approximately 4 million Pre-Retogeum (PRTG) tokens in three swift transactions. While the National Tax Service initially celebrated the seizure of assets worth 8.1 billion won ($5.6 million), this clerical error resulted in the loss of the vast majority of that haul, leaving the national treasury with a massive deficit and a major public relations crisis.
This “dunce-like mistake,” as some experts have labeled it, has drawn sharp criticism from the South Korean academic and tech communities. Professors and blockchain researchers noted that the incident demonstrated a fundamental lack of understanding regarding virtual asset security among government officials. In the world of non-custodial crypto storage, possessing the seed phrase is equivalent to legal ownership, rendering the physical possession of the hardware wallet irrelevant. The National Tax Service has since issued a formal apology, acknowledging that there is “no excuse” for the oversight and promising a thorough investigation into the leak route alongside stricter training for agents handling digital evidence.
Compounding the embarrassment, this incident is part of a troubling trend for South Korean law enforcement in 2026. Just last month, the National Police Agency discovered that 22 Bitcoin worth over $1.5 million had vanished from a vault in Gangnam, while prosecutors in Gwangju recently fell victim to a phishing attack that drained a significant portion of seized assets. As the government continues to aggressively target crypto-linked tax evasion, pressure is mounting for the establishment of specialized, third-party custodial systems. For now, the hunt for the missing PRTG tokens continues, though analysts warn that the low liquidity of the specific altcoin may make it difficult for the perpetrator to cash out without crashing the market.
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