South Korea Tax Agency Seeks Private Custodian After Crypto Security Lapses

South Korea’s National Tax Service (NTS) is moving to appoint a private custodian for seized cryptocurrency after a February incident exposed government held assets.

Wallet Seed Leak Sparks Losses

On February 26, the NTS accidentally published a crypto wallet seed phrase in a press release, including an image of a Ledger cold wallet with the mnemonic phrase visible. The breach led to unauthorized transfers of confiscated crypto valued at approximately $4.8 million, highlighting weaknesses in government custody practices.

Outsourcing Custody and Selection Criteria

The agency is drafting criteria to select a private custody provider by mid-2026. Evaluation factors will include security protocols, company size, and insurance coverage under South Korea’s Virtual Asset User Protection Act. The move reflects efforts to formalize how seized digital assets are stored and managed.

Task Force and Centralized Oversight

A new task force will oversee provider selection, improve operational manuals, conduct personnel training, and establish a centralized division for crypto related management. The decision follows multiple custody failures, including a separate case where Seoul’s Gangnam police lost 22 BTC, prompting an inter-agency review announced by Deputy Prime Minister Koo Yun-cheol on March 1.

South Korea aims to strengthen security and standardize handling of government held crypto after repeated losses.

Disclaimer

This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.