Exaggeration » Korean Tax Agency Press Release Reveals Mnemonic, 6.4 Billion Won in Seized Assets Emptied Overnight

South Korea’s National Tax Service has lost a Ledger wallet containing approximately $4.8 million in crypto assets after a photo in a press release revealed the seed phrase without masking it.

(Background: SK Hynix warns of a “Nvidia bubble”: if AI investments don’t profit, the industry could collapse overnight)

(Additional context: Bitcoin premiums are falling, and Bitcoin “reserve companies” are losing ground to US stock IPOs)

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• Seed phrase leak, hackers strike precisely
• Third incident in three months
• Seed phrase is the only key to assets

News of government agencies in Korea losing or having stolen cryptocurrencies keeps coming. Earlier this week, the Korean National Tax Service announced results of a crackdown on 124 malicious tax evaders, and a photo in their press release clearly showed the seized Ledger hardware wallet and the seed phrase note.

Within less than 24 hours, about $4.8 million worth of crypto assets in the wallet were looted.

Seed phrase leak, hackers strike precisely

According to Korean media reports, the hacker launched the attack in the early hours of February 27. They first transferred a small amount of Ethereum (ETH) as gas fees, then in three transactions moved out 4 million PRTG tokens from the wallet, resulting in an estimated loss of 6.4 billion Korean won, roughly NT$150 million or $4.8 million USD.

Experts criticize this as an “absolutely preventable disaster,” reflecting a serious lack of basic security awareness among law enforcement regarding crypto assets.

Third incident in three months

The frequency of Korean prosecutors or police losing seized cryptocurrencies is so high I suspect inside jobs:

January 2026 — Gwangju District Prosecutors’ Office: 320.88 BTC (about $21 million USD)

The Gwangju District Prosecutors’ Office discovered that 320.8 BTC they held was missing. These bitcoins were seized from a family involved in illegal gambling and money laundering, and were to be turned over to the state after criminal proceedings. An employee, during asset transfer verification, accidentally clicked on a phishing site, leading to the entire bitcoin stash being stolen.

Further reading: Oops! Korean Prosecutor’s Office clicks phishing site, $700 million worth of seized bitcoin stolen

February 2026 — Seoul Gangnam Police Station: 22 BTC (about $1.4 million USD)

Following the Gwangju incident, Korean police conducted an audit of all police stations’ crypto holdings, requiring all to check seized assets. It was found that 22 BTC seized in November 2021 during an investigation into exchange hacking had vanished. Two suspects have been arrested by Gyeonggi Northern Provincial Police.

Further reading: Cold wallets still exist, but Bitcoin disappears? Seoul Gangnam Police’s 22 BTC mysteriously missing

Seed phrase is the only key to assets

A seed phrase (also called a seed or recovery phrase) is the core credential of a crypto wallet. Anyone who obtains this string of words can fully control all assets in the wallet. Even with hardware wallets like Ledger, if the physical note of the seed phrase is lost or exposed, the security is effectively nullified.

In this case, the Korean National Tax Service’s released photo showed the seed phrase unmasked. Once this photo was made public online, it was equivalent to broadcasting a “master key” to the world.

This incident highlights a major security flaw in government digital asset management. As crypto becomes more widespread, both investors and law enforcement must recognize that seed phrases should be stored offline physically, and taking photos or uploading them online is strictly prohibited.