South Korean police lost $5 million in seized cryptocurrency after accidentally leaking a wallet password in a public press release. The National Tax Service shared images containing the mnemonic recovery phrase, allowing thieves to drain the funds from a cold wallet. Security experts criticized the agency for failing to redact sensitive information before publication.

Gizmodo reported that officials have no clear suspects and face challenges recovering the stolen tokens. The thief may struggle to convert such a large amount of cryptocurrency into cash under current market conditions, potentially forcing them to avoid major exchanges. Security consultant Cho compared posting the recovery phrase to leaving a wallet wide open, noting that the original wallet holder had followed best practices by keeping the password offline.

This incident follows a troubling pattern of cryptocurrency custody failures by South Korean authorities. In January, officials in Gwangju investigated the loss of seized bitcoin linked to a phishing attack, while last month, police in Seoul's Gangnam district launched an internal probe after 22 bitcoins vanished from a cold wallet under their control. The National Tax Service has promised to strengthen internal controls and training to prevent future breaches.