South Korea National Tax Service’s Mistake Resulted In $4.8 Million Crypto Loss
South Korea National Tax Service simply made a pricey mistake ensuing an enormous crypto loss.
In an official press launch, the company printed unredacted images that uncovered crypto pockets seed phrases. Within hours, an unknown actor used the data to empty 4 million Ethereum-based tokens, nominally price $4.8 million, from seized wallets earlier than returning them.
The funds weren’t dumped, however the incident exposes a critical operational safety failure. It highlights the dangers governments face when dealing with self-custodied digital property with out correct technical safeguards.
Key Takeaways
- The Lapse: NTS press supplies included high-resolution photographs of handwritten restoration phrases for seized Ledger {hardware} wallets.
- The Asset: 4 million Pre-Retogeum (PRTG) tokens had been taken, holding a theoretical worth of $4.8 million however near-zero market liquidity.
- The Outcome: The attacker funded the wallets with ETH for fuel, moved the tokens, and ultimately returned them to the unique handle.
The Leak: Tax Agency Publishes Ethereum Private Keys
On February 26, the National Tax Service introduced it had seized roughly 8.1 billion KRW, about $5.61 million, from repeat tax delinquents. To showcase the enforcement motion, officers launched images of the confiscated gadgets, together with a show labeled “Case 3.”
The downside was within the particulars. The photographs confirmed Ledger {hardware} wallets subsequent to a sheet of paper with the 12-word seed phrases absolutely seen.
An area professor described the error bluntly, evaluating it to publicly inviting somebody to empty your pockets. The incident highlights a fundamental however important hole in technical dealing with, particularly as authorities more and more seize and handle digital property.
On-Chain Data: The Swipe and Return
On-chain knowledge shows the wallets had been drained quickly after the images went public. An unknown actor first despatched a small quantity of ETH to cowl fuel charges, then transferred 4 million Pre-Retogeum (PRTG) tokens to a brand new handle.
That quantity represented roughly 40% of the token’s whole provide. While early experiences valued the stash at $4.8 million, liquidity tells a special story. The solely lively buying and selling pair exhibits minimal quantity, and even a small promote order would have crushed the value. Cashing out at scale was almost unattainable.
The tokens had been later returned to the unique wallets. Whether this was a white-hat motion or easy realization that the property had been illiquid is unclear.
The episode highlights a fundamental custody failure. The unique proprietor used a {hardware} pockets for safety, however that protection was undone when authorities photographed the seed phrase. The NTS has not but issued an in depth assertion, and the incident raises questions on how seized crypto property will likely be dealt with going ahead.
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