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Title: South Korean Police Lose Seized Crypto By Posting Password Online

Link: https://slashdot.org/story/26/03/02/0424251/s...

South Korean tax authorities lost millions in seized cryptocurrency after
publishing high-res photos of Ledger hardware wallets that clearly displayed
the wallets' seed phrases, allowing an unknown party to drain the funds.
Gizmodo reports: South Korea's National Tax Service seized crypto assets
during recent enforcement actions against 124 high-value tax evaders, but
now, a large chunk of that crypto cash has been lost. The operation
originally resulted in the confiscation of crypto holdings worth about 8.1
billion won, or roughly $5.6 million. However, officials later issued a press
release to showcase these efforts in recovering delinquent taxes, and the
release included photographs of Ledger hardware wallets taken into custody
along with handwritten notes that displayed the wallet seed phrases. Those
images attached to the press release turned out to be the critical error.
High-resolution photos clearly showed the mnemonic recovery phrases, which
serve as the master key for accessing the wallets. This exposure eliminated
any protection provided by the offline cold storage on the Ledger devices.
Possession of the seed phrase allows complete control, and anyone who knows
the phrase can import it into software or another hardware wallet and
initiate transfers without the original device. In this case, an unknown
individual who saw the photos published by law enforcement first added a
small amount of ether to one of the addresses to cover Ethereum network gas
fees necessary for outbound transactions. From there, they executed three
transfers to move approximately 4 million Pre-Retogeum, or PRTG, tokens. At
the time, those tokens carried a value of $4.8 million, but reporting from
The Block indicates liquidating that much value from the holdings would have
proven difficult due to market dynamics.

Read more of this story at Slashdot.

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