South Korea will urgently review custody controls for seized crypto after an official disclosure exposed a wallet recovery phrase. The incident triggered unauthorized transfers of roughly 4 million PRTG tokens, theoretically valued at $4.8 million, raising fresh concerns about state asset security.
Deputy Prime Minister and Finance Minister Koo Yun-cheol said Sunday that the government will inspect digital assets held by public institutions through enforcement seizures. The review will involve the Financial Services Commission and the Financial Supervisory Service. Koo said authorities will strengthen digital asset security management but did not provide a timeline.
최근 국세청의 디지털자산 정보 유출 사건과 관련하여, 정부는 금융위•금감원 등 관계기관과 함께 체납자로부터 압류 등으로 보유•관리하고 있는 정부•공공기관의 디지털자산 현황 및 관리 실태를 점검하고, 디지털자산 보안 관리강화 등 재발 방지 방안을 조속히 마련•시행하겠습니다.
— 구윤철 부총리 겸 재정경제부 장관 (@yuncheol_koo) March 1, 2026
참고로,… pic.twitter.com/RfvGJdvHy3
Can Korean Authorities Secure Confiscated Crypto?
The disclosure followed a Feb. 26 National Tax Service press release that inadvertently revealed the recovery phrase of a seized wallet, according to Korea JoongAng Daily. Onchain data cited by the newspaper showed the PRTG tokens were moved shortly after publication, though the token has limited liquidity. Authorities are reviewing claims that the assets were later returned.
The Korean National Police Agency’s Cyber Terror Response Division said it received a report from an individual claiming to have accessed the wallet using the exposed phrase and returned the funds the next day. Police plan to verify the account. The finance minister stated that South Korea does not hold cryptocurrencies outside of assets obtained through seizures, limiting exposure but concentrating custody risk.
The episode follows a string of custody failures across agencies. Since January, prosecutors and police have reported missing or drained seized assets, including 22 bitcoin lost from a Gangnam police vault. Earlier losses at a district prosecutors’ office prompted nationwide audits of government-held crypto. Yet repeated incidents suggest procedural gaps remain unresolved.
Heightened inspections now place operational security under scrutiny as regulators expand oversight of digital asset markets. Still, market participants will watch whether authorities disclose standardized custody protocols or adopt third-party institutional custodians in the coming weeks.
