South Korea’s National Tax Service faced a public security backlash after a press release exposed a recovered wallet’s mnemonic phrase, enabling subsequent thefts of seized crypto worth about $4.8 million.

Authorities, with help from the Financial Services Commission and Financial Supervisory Service, will review how digital assets are held, seized, and managed across government and public institutions.

The stolen funds came from the Pre-Retogeum (PRTG) token, representing the bulk of the seized crypto value at roughly $4.8 million.

The ministry has not provided detailed new safeguards, and media outlet Decrypt has asked for further comment.

Security experts warn that the incident underscores broader risks in self-custody, insider threats, data mishandling, and social engineering in crypto holdings.

Experts deem the exposure a preventable failure and advocate offline storage of recovery phrases on physical media as a best practice.

Analysts recommend seed-phrase hygiene and immediate actions if exposure occurs, including moving funds to a secure wallet.

Although the stolen tokens were hard to cash out, the episode highlights the need for proper custody controls in public institutions.

The case has spurred calls for stricter custody standards, better technical controls, and reforms in how state-held digital assets are managed and overseen.

The agency revised its manual and pledged stronger safeguards to prevent credential exposure in public communications.

The incident exposes weaknesses in crypto custody practices within government agencies, prompting calls for tighter internal controls and improved security.

External sources and media coverage corroborate the on-chain transfers and expert analyses surrounding the theft.