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South Korea’s National Tax Service just lost over US$4.8 million in crypto after it posted a photo of a hardware wallet that stored the private keys controlling over 4 million Pre-Retogeum (PRTG) tokens alongside a handwritten note containing the wallet’s mnemonic recovery phrase. According to Maeil Business Newspaper [machine translated], the image was included in its press release to promote the agency’s push to go after “high value and habitual delinquents,” saying that it has seized KRW 8.1 billion or around US$5.4 million worth of assets during the raid. ‘
Hardware wallets do not store the crypto — instead, they keep the private keys that control blockchain addresses, ensuring that only the person who knows the PIN can access the token. But if you lose the hardware wallet and have no backup of these keys, you could potentially lose permanent access to the blockchain address that holds your tokens. Because of this, many of these devices generate a mnemonic seed phrase during setup that lets you recreate all your private keys and addresses, even without the physical wallet.
Unfortunately, it seems that the investigators had no idea of the significance of the mnemonic recovery phrase, as they published it without redacting the information written on the piece of paper. This is like posting the number, expiry date, and security code of your credit card online before the days of multi-factor authentication or sharing your social security number on Reddit. Because of this, the first person who realized and took advantage of that mistake was able to transfer the 4 million PRTG to another wallet (presumably their own) with basically zero issues. According to blockchain analysis, the thief first deposited some Ethereum (ETH) to pay for the transaction fees, then proceeded to withdraw the huge amount in four transactions.
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Key considerations
- Investor positioning can change fast
- Volatility remains possible near catalysts
- Macro rates and liquidity can dominate flows
Reference reading
- https://www.tomshardware.com/tech-industry/cryptocurrency/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/cryptocurrency/south-korean-authorities-lose-over-usd4-8-million-in-crypto-after-posting-mnemonic-recovery-phrase-online-stolen-prtg-tokens-part-of-funds-seized-by-national-tax-service-from-high-value-tax-evaders#main
- https://www.tomshardware.com
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Informational only. No financial advice. Do your own research.