The headline-grabbing tale of an Italian man who said he was kidnapped and by captors seeking his bitcoin highlights a dark corner of the cryptocurrency world: the threat of violence by thieves seeking digital assets.
The alleged attempted robbery is known as a “wrench attack.” It’s a name popularized by an online that mocked how easily high-tech security can be undone by hitting someone with a wrench until they give up passwords.
Wrench attacks are on the rise thanks in part to cryptocurrency’s move into mainstream finance, Phil Ariss of the crypto tracing firm TRM Labs said in a recent blog .
“Criminal groups already comfortable with using violence to achieve their goals were always likely to migrate to crypto,” Ariss said.
Some of the crypto’s key characteristics help explain why wealthy individuals who hold a lot of digital assets can be ripe targets for such attacks.
The draw
Cryptocurrencies like bitcoin offer traders full control of their funds without the need for a bank or permission from a government to buy, sell or hold it. The trade-off is that if funds are lost or stolen, there can be no way to get them back.
Self-reliance is a key ethos of crypto. Securing and controlling one’s private keys, which are like passwords used to access one’s crypto holdings, is viewed as sacrosanct among many in the crypto community. A popular motto is “not your keys, not your coins.”
Transactions on the blockchain, the technology that powers cryptocurrencies, are permanent. And unlike cash, jewelry, gold or other items of value, thieves don’t need to carry around stolen crypto. With a few clicks, huge amounts of wealth can be transferred from one address to another.
In the case in New York, where two people have been charged, a lot of details have yet to come out, including the value of the bitcoin the victim possessed.
Crypto thefts
Stealing cryptocurrency is almost as old as cryptocurrency itself, but it’s usually done by hacking. North Korean state hackers alone are believed to have stolen billions of dollars’ worth of crypto in recent years.
In response to the threat of hacking, holders of a large amount of crypto often try and keep their private keys off the internet and stored in what are called “cold wallets.” Used properly, such wallets can defeat even the most sophisticated and determined hackers.
But they can’t defeat thieves who force a victim to give up their password to access their wallets and move money.
The case in New York is the latest in a string of high-profile wrench attacks. Several have taken place in France, where thieves cut off a crypto executive’s finger.
Mitigation
Experts suggest several ways to mitigate the threats of wrench attacks, including using wallets that require multiple approvals before any transactions.
Perhaps the most common way crypto-wealthy individuals try to prevent wrench attacks is by trying to stay anonymous. Using nicknames and cartoon avatars in social media accounts is common in the crypto community, even among top executives at popular companies.
The post Why ‘wrench attacks’ on wealthy crypto holders are on the rise appeared first on Associated Press.
