South Korea orders cross-agency probe after repeated crypto custody failures

CoinTelegraph

by Christina Comben

March 2, 2026

AI-Generated Deep Dive Summary

South Korea’s Deputy Prime Minister Koo Yun-cheol has ordered a cross-agency review of how government institutions handle seized crypto assets following a significant security lapse. The National Tax Service (NTS) recently exposed a wallet seed phrase in a press release, leading to the loss of approximately 4 million Pre-Retogeum (PRTG) tokens worth $4.8 million. This incident highlights critical vulnerabilities in the management of digital assets by public institutions and underscores the urgent need for improved security protocols. The NTS inadvertently included an image of a hardware wallet displaying its full recovery phrase in a press release, which allowed unauthorized access to the wallet’s private keys. As a result, authorities lost control over the confiscated crypto assets, emphasizing the risks associated with improper handling of digital currencies. This incident has raised concerns about the safeguards in place for managing seized cryptocurrencies and the potential for similar breaches in the future. In response, Deputy Prime Minister Koo announced that the government, along with the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS), will conduct a comprehensive review of all seized digital assets. The goal is to identify vulnerabilities and implement stronger security measures to prevent future incidents. This move reflects growing recognition of the importance of securing crypto assets and maintaining public trust in government handling of digital currencies. The situation in South Korea serves as a cautionary tale for other nations grappling with the challenges of regulating and managing cryptocurrency. Proper custody practices are essential to protect both individuals and institutions from potential breaches. The exposed seed phrase incident not only resulted in financial losses but also undermines confidence in government oversight of crypto assets. This case underscores the need for

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Originally published on CoinTelegraph on 3/2/2026