South Korea’s National Tax Service (NTS) is selecting a private storage service provider for confiscated crypto assets after a February press release revealed a wallet recovery phrase and triggered an unauthorized transfer of confiscated tokens.
On February 26, NTS accidentally disclosed a crypto wallet seed phrase in an official press release, which led to the unauthorized transfer of approximately $4.8 million worth of crypto tokens. The publication included an image of a frosty Ledger wallet and a piece of paper showing the mnemonic phrase without any blur.
ZDNet Korea cited people familiar with the matter reported that the agency is reviewing its plan for outsourcing custody of confiscated cryptocurrencies and developing criteria for selecting providers. According to reports, NTS intends to select a supplier in the first half of 2026.
The agency plans to evaluate candidates based on several factors, including security requirements, company size and whether the company has insurance under South Korea’s Virtual Asset User Protection Act, ZDNet Korea reports.
The move shows South Korean authorities are trying to formalize custody of confiscated cryptocurrencies after a series of handling failures exposed weaknesses in how confiscated digital assets are stored and managed.
A novel task force overseeing the custody service provider selection process
According to reports, deposit selection will be led by a newly formed task force focused on improving digital asset management systems.
The task force is reportedly working on several initiatives, including improving operational instructions covering the full lifecycle of seized assets, from seizure to storage and disposal. It would also conduct staff assessments and training.
Related: South Korea’s opposition party insists on abolishing the planned 22% tax on cryptocurrencies
The group is also preparing to establish a dedicated department that will supervise work related to cryptocurrencies.
An NTS official said that because cryptocurrencies are relatively novel, responsibilities are divided between departments. However, preparations are underway to create a centralized unit, reports ZDNet Korea.
NTS wallet seed leak prompts inter-agency investigation
The NTS wallet leak and failure to make a separate arrest, which resulted in Seoul’s Gangnam police allegedly losing 22 confiscated BTC, prompted authorities to conduct an inter-agency review of confiscated crypto assets.
On March 1, South Korea’s Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol announced the opening of an interagency investigation into the government’s handling of seized digital assets.
Warehouse: Metaplanet Bet on Japan Bitcoin, Bithumb Ordered Suspension: Asia Express
