South Korea's National Tax Service (NTS) is moving to select a private custody provider for seized crypto assets following a major security lapse in February that resulted in the unauthorized transfer of tokens worth approximately $4.8 million.
The incident occurred on February 26, when the NTS accidentally exposed a crypto wallet seed phrase in an official press release. The release included an unblurred image of a Ledger cold wallet and a sheet of paper showing the mnemonic phrase, which led to the theft of the confiscated assets.
In response, the agency is now reviewing a plan to outsource the custody of confiscated cryptocurrencies and is drafting selection criteria for providers. According to reports from ZDNet Korea, the NTS aims to finalize its selection within the first half of 2026. Candidates will be evaluated based on security requirements, company size, and whether the firm holds insurance under South Korea's Virtual Asset User Protection Act.
The selection process will be led by a newly-formed task force focused on advancing digital asset management systems. This group is working on initiatives including improving operational manuals covering the full lifecycle of seized assets—from seizure to storage and liquidation—as well as conducting internal assessments and personnel training. The task force is also preparing to establish a dedicated, centralized division to oversee all crypto-related work, as responsibilities are currently fragmented across departments.
This security failure, along with a separate incident where Seoul's Gangnam police allegedly lost 22 seized Bitcoin, has prompted a broader governmental review. On March 1, South Korea's Deputy Prime Minister and Minister of Economy and Finance, Koo Yun-cheol, announced a cross-agency probe into how the government handles seized digital assets.
