Leaked recovery phrases led to seized tokens being moved
South Korea's tax service accidentally revealed the secret recovery phrases for cryptocurrency wallets in a press release. This resulted in the tokens that had previously been seized by the authorities being moved from those wallets.
This incident has become the latest problem faced by South Korean government agencies when dealing with cryptocurrencies. In recent months, there have been an increasing number of cases of improper storage and management of crypto assets in the country.
For example, in August 2022, the Seoul Prosecutors' Office lost access to $47 million in Bitcoin that had been seized from a criminal group. In November of the same year, the National Tax Service of Korea reported that $22 million in cryptocurrency had been moved from its accounts.
These data leaks create reputational risks for South Korean government agencies and undermine investor confidence in the country's crypto industry. It is crucial that the authorities strengthen security measures and develop clear protocols for working with digital assets.