The South Korean National Tax Service is under intense scrutiny after a series of security lapses led to the theft of digital assets valued at millions of dollars. A critical misstep allowed a crypto wallet’s recovery key—used to seize crypto from tax dodgers—to leak to the media. As a consequence, a total of 4 million PRTG tokens vanished in two separate incidents, reigniting debate over public institutions’ competency in digital asset management.
PRTG Tokens Stolen in Quick Succession
The controversy erupted during a press conference on February 26, when the National Tax Service aimed to showcase its operations targeting high-value tax evaders. In doing so, the agency revealed images of a cold wallet it held—unknowingly including a photo displaying the critical 24-word recovery phrase needed to unlock the crypto funds.
Blockchain analysts and police reports reveal that, soon after the sensitive details were exposed, an individual accessed the wallet on February 27, transferring all PRTG tokens to a personal account. The person claimed to be an ordinary trader and told media and police the following day that obtaining the tokens had been remarkably easy due to the leaked information.
This same individual later surrendered all four million PRTG tokens, returning them to the tax agency’s wallet. But within just two hours of restitution, a second actor exploited the same vulnerability and drained the wallet anew, moving the funds to a different account. The repeated breaches spotlighted glaring weaknesses in the agency’s safeguards.
Systemic Flaws Exposed
Security experts criticized the tax authority for failing to transfer the returned assets to a new, secure wallet after the exposure of the recovery key. With the sensitive phrase still at large, another cyber intruder easily gained access. While the agency declined to release further details, it insisted no additional administrative errors occurred during the second theft.
The stolen PRTG tokens are exclusively traded on the MEXC platform. Professor Cho Jae-woo from Hansung University remarked that while the market value of these tokens appears significant in theory, a sale of such magnitude would likely cause the token’s price to plummet in practice.
Official Apology and Launch of Probe
On March 1, the National Tax Service issued an official statement, shouldering full responsibility. The agency admitted fault for sharing confiscated wallet photos without proper review and pledged an independent external security audit, along with strengthened pre-publication review processes to prevent similar oversights in the future.
“This incident was entirely the fault of the National Tax Service.”
The agency called for a police investigation, prompting the Cyber Terrorism Response unit to begin a preliminary inquiry. Authorities are now tracking which media outlets accessed high-resolution images and who might have obtained the wallet keys.
Recent months have seen other government mishaps involving digital assets. The prosecutor’s office lost temporary possession of 320 bitcoins, while a police station reported the disappearance of 22 bitcoins held in a vault. Such events have come to exemplify consecutive failures among South Korea’s main enforcement bodies regarding the custody of crypto assets. Experts warn that as cryptocurrencies are increasingly used for illicit income, institutions must swiftly bolster both technical and operational capacities.
