Ethereum tokens were taken and later restored after the South Korean tax authority made wallet seed phrases public

South Korean Tax Agency Accidentally Exposes Crypto Wallet Seed Phrases

One of the most important principles in managing your own cryptocurrency is to never share your seed phrase—the unique sequence of 12 or 24 words that grants access to your wallet and the assets it holds.

This week, South Korea’s National Tax Service (NTS) made a critical error by publicly releasing a photo that displayed handwritten seed phrases in a press statement. According to a report from Maeli Business Newspaper, this oversight allowed an unknown individual to access and transfer digital tokens valued at $4.8 million. Fortunately, these illiquid tokens were eventually returned.

How the Incident Unfolded

The situation arose after the NTS conducted a raid targeting individuals with significant unpaid taxes. During the operation, officials photographed confiscated items for a press release. Among the seized assets, one case—referred to as “Case 3”—included several Ledger hardware wallets and their corresponding seed phrases, which were clearly visible in the published images.

Professor Cho Jae-woo from Hansung University commented, “This is essentially an open invitation for someone to access your wallet and take your funds.”

Shortly after the press release went live, someone exploited the exposed seed phrases, transferring assets from at least three wallets to an Ethereum address ending in “86c12,” before moving them again.

Details of the Token Transfer

Blockchain records reveal that three separate addresses, collectively holding 4 million Pre-Retogeum (PRTG) tokens—worth $4.8 million at current prices—received small amounts of Ethereum to cover transaction fees. The PRTG tokens were then sent to the “86c12” address.

These three wallets, inactive since January 2023, controlled 40% of the total PRTG supply. PRTG is an Ethereum-based token with only 1,500 holders and 1,600 lifetime transfers, and is no longer actively traded.

Liquidity Issues and Token Value

Although the face value of the stolen tokens was reported as $4.8 million, the actual amount that could be realized from selling them would be far less due to extremely limited market liquidity. PRTG is not available on decentralized exchanges and is listed on only one centralized platform—MEXC—where daily trading volume was just $332.

Data from CoinGecko indicates that selling as little as $59 worth of PRTG would cause a 2% price drop. In contrast, it would take a $2.6 million sale of Bitcoin on MEXC to move its price by the same percentage.

Tokens Returned and Ongoing Crypto Mishaps

Roughly 20 hours after the initial transfer, an address linked to “86c12” sent all the PRTG tokens back to their original wallets, possibly recognizing the difficulty in liquidating them.

This episode is the latest in a series of crypto-related missteps by South Korean authorities. Earlier in the week, it was revealed that $1.4 million in Bitcoin disappeared four years ago due to police failing to follow proper custody procedures.

Additionally, South Korean regulators have faced criticism for missing an internal flaw at the Bithumb exchange, which resulted in $43 billion worth of Bitcoin being mistakenly sent to users instead of small amounts of Korean won earlier this month.