While there is plenty of information online about securing your digital assets, less is written about the physical threat to crypto and Bitcoin holders. Over the past few years, there has been a worrying uptick in physical attacks on crypto holders.

In February, the arrest of five Russian men in Phuket highlights this concerning trend of violent crimes targeting crypto holders. According to local authorities, the suspects allegedly abducted a Belarusian couple, compelling them to transfer approximately 31 million baht ($901,200) in crypto before releasing them. The incident occurred near the Lor Rong intersection in Muang district, where the couple was taken in a black Hyundai van after being intercepted on their motorcycle.

Initial investigations led to the detention of four individuals, with two suspects captured at Phuket airport while attempting to flee the country. The fifth suspect believed to be the ringleader, was later apprehended at a massage parlor on Patong Beach. All five have been charged with robbery, coercion, and illegal detention, among other offenses.

This month, in Hong Kong, two women were arrested for allegedly kidnapping a three-year-old boy and demanding a ransom of over HK$5 million in crypto. The child was rescued unharmed, and the suspects were detained for further investigation.

In another high-profile case, a violent gang in the United States was convicted for a series of home invasions targeting crypto holders. The group’s activities, marked by extreme violence and coercion, involved multiple victims across several states. The gang’s actions included threatening victims with physical harm and demanding access to their crypto holdings.

Another incident involved a crypto angel investor who was the victim of a home invasion earlier this year. The attackers forced them to unlock a Ledger device. The person, who wishes to remain anonymous due to the ongoing investigation, told CryptoSlate, “I never ever thought this would be an attack vector for me, but now I know better.”

As cryptocurrencies become increasingly mainstream, they attract investors and criminals seeking to exploit the anonymity and ease of transfer inherent in these digital assets. Law enforcement agencies worldwide are responding with increased vigilance, but crypto transactions’ decentralized and often pseudonymous nature continues to pose challenges.

Staying safe in crypto is not just about online security

Crypto holders are advised to enhance their security practices, including using multi-signature wallets, maintaining operational security, and limiting the disclosure of their digital asset holdings. The recent spate of violent incidents serves as a stark reminder of the physical risks associated with digital wealth, prompting a reevaluation of security protocols in the digital age.

Bitcoin developer Jameson Lopp, Co-founder & Chief Security Officer
CasaHODL, commented,

“You wouldn’t walk around with hundreds of thousands of dollars in cash on you. Yet a ton of you are doing so with your bitcoin. This is a danger not only to yourself, but to the rest of us, as it is teaching criminals that wrench attacks against Bitcoiners have a great ROI.”

The $5 wrench attack refers to a scenario where an attacker uses physical force or threats (symbolized by a cheap $5 wrench) to coerce a crypto owner into revealing their private keys or transferring their digital assets. This attack emphasizes that simple physical intimidation can bypass even the most sophisticated cryptographic security.

While the $5 wrench attack may seem primitive compared to sophisticated hacking techniques, it remains a significant concern in the crypto community. It reminds us that comprehensive security must consider both digital and physical threats.

If you own considerable amounts of Bitcoin or crypto, it is recommended that you be careful about what you share online related to your physical location, not post real-time updates or photos that identify your location, and avoid wearing industry-related clothing outside of conferences. Further, many hardware wallets allow users to use separate pins to unlock different wallets. Setting up a honeytrap wallet containing negligible digital assets could enable victims to comply with attackers without relinquishing the majority of their holdings.