South Korea's National Tax Service lost 8.1 billion won ($5.6 million) in seized crypto after publishing photos of Ledger hardware wallets with visible seed phrases. The press release intended to showcase enforcement actions against 124 tax evaders instead exposed the recovery phrases needed to access the wallets. High-resolution images clearly displayed the mnemonic phrases that serve as master keys for crypto assets.

An unknown individual who saw the photos added ether to cover gas fees, then transferred approximately 4 million PRTG tokens worth $4.8 million. A Hansung University professor criticized the incident as demonstrating the tax authorities' lack of understanding of virtual assets. Because the seed phrase appeared in a widely distributed press release, investigators have no clear suspect - anyone who saw the photos could have executed the theft.

This mishap follows a similar case from November 2021 when Gangnam Police Station's 22 seized bitcoin were drained after the recovery phrase reached a third party. These incidents highlight the unique security challenges of crypto custody. Unlike traditional assets, blockchain transactions cannot be reversed, and self-custody places significant responsibility on individuals. The South Korean treasury lost billions in won due to what amounts to a basic operational error in handling digital assets.