The shocking story of an Italian man who said he was kidnapped and tortured for weeks in a fancy Manhattan townhouse by people trying to steal his bitcoin shows a dangerous side of cryptocurrency: the risk of violence from criminals after digital money.
This kind of robbery is called a “wrench attack.” The term comes from an online comic that joked about how easy it is to break high-tech security by hitting someone with a wrench until they give up their passwords.
Wrench attacks are increasing, partly because cryptocurrency is becoming more common in finance, said Phil Ariss from the crypto tracking company TRM Labs in a recent blog post.
“Criminal groups already comfortable with using violence to achieve their goals were always likely to migrate to crypto,” Ariss said.
Some special features of cryptocurrency help explain why rich people with large amounts of digital assets can be easy targets for these attacks.
The appeal
Cryptocurrencies like bitcoin let people fully control their money without needing a bank or government approval to buy, sell, or hold it. But the risk is that if the money is lost or stolen, there is no way to get it back.
Being independent is very important in crypto. Keeping control of private keys, which are like passwords to access crypto holdings, is considered very sacred by many in the crypto community. A common saying is “not your keys, not your coins.”
Blockchain, the technology behind cryptocurrencies, makes all transactions permanent. Unlike cash, jewelry, or gold, thieves don’t have to carry stolen crypto physically. They can transfer large amounts of wealth with just a few clicks.
In the New York case, where two people have been charged, many details are still unknown, including how much bitcoin the victim had.
NY cops arrest John Woeltz in New YorkCrypto theft
Stealing cryptocurrency has been happening since crypto started, but it mostly happens through hacking. North Korean hackers, for example, are believed to have stolen billions of dollars in crypto over the past years.
To fight hacking, people with lots of crypto often keep their private keys off the internet in “cold wallets.” When used correctly, these wallets can stop even the smartest hackers.
But cold wallets cannot stop thieves who force victims to give up their passwords to move money.
The New York case is just the latest in a series of wrench attacks. Several happened in France, where thieves even cut off a crypto executive’s finger.
How to reduce risks
Experts suggest several ways to lower the chances of wrench attacks, such as using wallets that need multiple approvals before any transaction.
One common way crypto owners protect themselves is by staying anonymous. Using fake names and cartoon pictures on social media is common in the crypto world, even among top leaders at well-known companies.
