Tax Officials Flaunt Crypto Seizure as Rp81 Billion Is Drained by Hackers

South Korea’s National Tax Service (NTS) accidentally exposed the mnemonic seed phrase for a seized crypto wallet when it published a press release over the weekend detailing assets seized from 124 high-profile tax defaulters. To illustrate the seizure, the NTS attached high-resolution photos of the evidence, including a Ledger cold wallet belonging to a suspect identified as “Mr C”. Next to the physical wallet lay a slip of paper bearing the seed phrase, which the NTS apparently forgot to redact before releasing the images to media outlets.

According to KompasTekno’s reporting of Ars Technica, the unredacted photo quickly became a prime target for bad actors. Within hours of the press release going live, an anonymous individual used the leaked seed phrase to take control of the wallet. The attacker initially sent a small amount of Ethereum (ETH) to cover network transaction fees, then executed three transfers to siphon around 4 million Pre-Retogeum (PRTG) tokens into their own wallet.

The operative criticised authorities for showing little understanding of virtual assets and failing to implement mandatory safeguards, such as transferring seized funds to a government-managed secure wallet first.

In the wake of the incident, the NTS publicly apologised and pledged a complete overhaul of their standard operating procedures (SOPs) relating to asset seizure and digital asset custody. The agency has since partnered with South Korea’s National Police Agency to trace the hacker’s trail through blockchain transaction flows.

Nevertheless, given the decentralised nature of cryptocurrency, recovering billions of rupiah is expected to be slow and highly challenging.