New Risks of Encryption Assets: Threat of Physical Attacks is Growing More Severe

The security threats in the blockchain industry are expanding from on-chain to offline. Recently, a series of physical attack incidents targeting encryption asset holders have sparked widespread concern in the industry. These attacks are no longer limited to hacking or contract vulnerabilities, but directly threaten the personal safety of asset holders.

A cryptocurrency billionaire narrowly escaped a kidnapping attempt last year. The attackers tracked his movements using GPS, forged documents, and other means, and attempted to forcibly take control of him. Fortunately, the victim managed to escape by fighting back. As the value of cryptocurrency assets continues to rise, such targeted physical attacks are on the rise.

This article will conduct an in-depth analysis of the characteristics of such attacks, review typical cases, outline the criminal chain behind them, and propose practical prevention recommendations.

What is a "Wrench Attack"

The concept of "wrench attack" originates from a web comic, depicting an attacker threatening a victim using simple physical means such as a wrench to force them to surrender their password or assets. Unlike technical attacks, this method directly targets human vulnerabilities, achieving its goals through threats, extortion, or even kidnapping.

Review of Typical Cases

Since the beginning of this year, kidnapping cases targeting encryption users have been frequent, with victims including core members of projects, opinion leaders, and ordinary users.

In early May, French police successfully rescued the father of a cryptocurrency tycoon who had been kidnapped. The kidnappers demanded a huge ransom and tortured the victim.

In January, the co-founder of a hardware wallet company and his wife were attacked at home by armed assailants, who severed his fingers and filmed a video for extortion.

In June, a suspect involved in planning multiple kidnappings of French encryption entrepreneurs was captured in Tangier. This suspect is believed to be one of the masterminds behind the kidnapping case of the founder of the aforementioned hardware wallet company.

Another shocking case occurred in New York. An Italian encryption investor was lured and imprisoned for three weeks, suffering severe torture. The criminal gang accurately identified the target through on-chain analysis and social media tracking.

In mid-May, the family of a founder of a certain encryption company narrowly escaped a kidnapping on the streets of Paris, thanks to the assistance of passersby.

These cases indicate that, compared to on-chain attacks, offline violent threats are more direct, efficient, and have a lower implementation threshold. It is worth noting that the disclosed cases may only be the tip of the iceberg. Many victims choose to remain silent due to various concerns, making it difficult to accurately assess the true scale of such attacks.

Crime Chain Analysis

A study by the University of Cambridge systematically analyzed cases of global encryption users encountering violent coercion, revealing attack patterns and defense challenges. By synthesizing multiple typical cases, we can summarize that the criminal chain of entity attacks roughly covers the following key links:

1. Information Locking

Attackers usually start from on-chain information, combining transaction behaviors, label data, etc., to preliminarily assess the scale of the target assets. At the same time, social media statements and public interviews are also important sources of intelligence.

2. Reality positioning and contact

After identifying the target identity, the attacker will attempt to obtain their real-life information, including residence, frequently visited places, and family structure. Common methods include social platform inducement, reverse lookup of public information, and reverse search of data leaks.

3. Violent Threats and Extortion

Once the target is controlled, the attacker often uses violent means to force them to hand over critical information such as wallet private keys and mnemonic phrases. Common methods include physical harm, coercing transfer operations, and threatening relatives.

4. Money Laundering and Fund Transfer

After obtaining key information, attackers usually quickly transfer assets, using methods such as mixers, transferring to controlled addresses or non-compliant exchanges, and cashing out through over-the-counter channels. Some attackers have a background in blockchain technology and deliberately create complex fund flow paths to evade tracking.

Countermeasures

In the face of physical attack threats, traditional methods such as multi-signature wallets or decentralized mnemonic phrases are not practical and may even exacerbate violent behavior. A more prudent strategy should be "give what you can, and keep losses controllable:"

• Set up a lure wallet: Prepare an account that appears to be the main wallet but only holds a small amount of assets for "stop-loss feeding" in emergencies.

• Family Security Management: Family members need to grasp the asset situation and response methods; set up a security code to convey danger signals; strengthen the security protection of home devices and residence.

• Avoid identity exposure: Manage social media information carefully, avoid flaunting wealth or sharing transaction records; be cautious in revealing information about holding encryption assets in real life; pay attention to managing your friend circle to prevent acquaintances from leaking information. The most effective protection is always to make people "not know you are a target worth monitoring."

Conclusion

The rapid development of the encryption industry has brought new security challenges. While meeting regulatory requirements, how to balance user privacy protection and risk control has become an important issue faced by platforms. It is recommended to introduce a dynamic risk identification system based on traditional KYC processes to reduce unnecessary information collection. At the same time, integrating professional anti-money laundering and tracking services can enhance risk control capabilities from the source. Additionally, strengthening data security capabilities is also essential, and services such as red team testing by professional security teams can be utilized to comprehensively assess the exposure paths and risk points of sensitive data.