South Korea Nationwide Tax Service simply made a expensive mistake ensuing an enormous crypto loss.
In an official press launch, the company printed unredacted pictures that uncovered crypto pockets seed phrases. Inside hours, an unknown actor used the data to empty 4 million Ethereum-based tokens, nominally value $4.8 million, from seized wallets earlier than returning them.
The funds weren’t dumped, however the incident exposes a severe operational safety failure. It highlights the dangers governments face when dealing with self-custodied digital belongings with out correct technical safeguards.
Key Takeaways
- The Lapse: NTS press supplies included high-resolution photos of handwritten restoration phrases for seized Ledger {hardware} wallets.
- The Asset: 4 million Pre-Retogeum (PRTG) tokens have been taken, holding a theoretical worth of $4.8 million however near-zero market liquidity.
- The Consequence: The attacker funded the wallets with ETH for gasoline, moved the tokens, and finally returned them to the unique handle.
The Leak: Tax Company Publishes Ethereum Non-public Keys
On February 26, the Nationwide 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 pictures of the confiscated objects, together with a show labeled “Case 3.”
The issue was within the particulars. The photographs confirmed Ledger {hardware} wallets subsequent to a sheet of paper with the 12-word seed phrases totally seen.
A neighborhood professor described the error bluntly, evaluating it to publicly inviting somebody to empty your pockets. The incident highlights a fundamental however crucial hole in technical dealing with, particularly as authorities more and more seize and handle digital belongings.
On-Chain Knowledge: The Swipe and Return
On-chain information exhibits the wallets have been drained quickly after the pictures went public. An unknown actor first despatched a small quantity of ETH to cowl gasoline charges, then transferred 4 million Pre-Retogeum (PRTG) tokens to a brand new handle.
That quantity represented roughly 40% of the token’s complete provide. Whereas early studies valued the stash at $4.8 million, liquidity tells a unique story. The one 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 inconceivable.
The tokens have been later returned to the unique wallets. Whether or not this was a white-hat motion or easy realization that the belongings have been illiquid is unclear.
The episode highlights a fundamental custody failure. The unique proprietor used a {hardware} pockets for safety, however that safety 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 belongings can be dealt with going ahead.
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