South Korean Police Lose Seized Crypto After Posting Password Online

Authorities' mistake exposes recovery phrases, allowing theft of $4.8 million in tokens.

Published on Mar. 2, 2026

Got story updates? Submit your updates here. ›

South Korea's National Tax Service seized crypto assets worth $5.6 million during tax evasion enforcement actions, but later published photos in a press release that revealed the wallet seed phrases, allowing an unknown individual to access and transfer out around $4.8 million worth of the seized tokens. This incident highlights the risks of improper handling of crypto assets by law enforcement and the finality of blockchain transactions.

Why it matters

The loss of the seized crypto assets due to the authorities' mistake underscores the challenges governments face in properly securing and managing cryptocurrency holdings. It also demonstrates the vulnerability of crypto assets to theft when recovery phrases are exposed, and the difficulty in recovering funds once they have been transferred out of seized wallets.

The details

The National Tax Service originally confiscated crypto holdings worth about 8.1 billion won ($5.6 million) from 124 high-value tax evaders. However, in a press release showcasing their enforcement efforts, the agency included photographs of the seized Ledger hardware wallets that clearly displayed the handwritten mnemonic recovery phrases. This allowed an unknown individual to access the wallets, add a small amount of ether to cover transaction fees, and then transfer out approximately $4.8 million worth of PRTG tokens.

  • The crypto assets were seized by the National Tax Service during recent enforcement actions against tax evaders.
  • The press release containing the compromising photos was published on March 1, 2026.

The players

National Tax Service

The South Korean government agency that seized the crypto assets during tax evasion enforcement actions.

Unknown individual

The person who accessed the seized crypto wallets after seeing the recovery phrases published in the press release, and transferred out approximately $4.8 million worth of tokens.

Got photos? Submit your photos here. ›

What they’re saying

“The incident showed 'the tax authorities' basic lack of understanding of virtual assets' and cost the national treasury billions in Korean won.”

— Hansung University professor (The Block)

What’s next

Authorities in South Korea are investigating the incident and attempting to recover the stolen crypto assets, but the finality of blockchain transactions and lack of a central authority make recovery efforts challenging.

The takeaway

This case highlights the critical importance of properly securing and handling cryptocurrency assets, especially for government agencies tasked with seizing and managing such holdings. The exposure of sensitive recovery information can lead to devastating losses, underscoring the need for robust crypto security protocols and training for law enforcement and other officials.