The drive has been missing for months and authorities are refusing to launch an investigation and are trying to keep the case quiet, South Korea's Yonhap News Agency reported Thursday.
The Defense Security Command admitted an anonymous informant told it about the missing USB drive.
The report said an officer at a front-line battalion in Gangwon Province lost the drive in July, then lied to superiors, telling them he had found it, but discarded it because it was damaged.
"We received the information on Dec. 13. It was dismissed because we thought the anonymous informant had little credibility," an official from the command said.
The device has level-2 classified information about strategic plans for the battalion, as well as a regiment, sources told Yonhap.
"The military unit, the DSC and ministry of defense were all informed of the case but never took action," a source said in the Yonhap report. "It (the drive) contains confidential information on national security, but nobody knows where it is."