High-Risk Era of Crypto Assets: Off-Chain Attack Threats are Becoming Increasingly Prominent

In the blockchain world, we often focus on threats such as on-chain attacks, smart contract vulnerabilities, and hacker intrusions. However, a series of recent events remind us that risks have spread to the off-chain realm.

A well-known encryption entrepreneur narrowly escaped a shocking kidnapping attempt last year. The criminals tracked his movements using GPS, forged documents, and disposable phones. As the entrepreneur was about to go upstairs, the assailants attacked from behind, attempting to cover his head with a bag and subdue him. Fortunately, the entrepreneur fought back fiercely and bit off one of the attacker's fingers, allowing him to escape.

As the value of encryption assets continues to rise, physical attacks targeting crypto users have become increasingly common. This article will delve into the methods of these attacks, review typical cases, explore the criminal networks behind them, and provide practical prevention suggestions.

Wrench Attack: A Low-Cost High-Efficiency Threat

The concept of "wrench attack" originates from a web comic, depicting a scenario where an attacker does not use complex technical means, but instead employs direct threats or violence to force the victim to hand over their password or assets. This method of attack is simple and brutal but often very effective.

Disturbing Case Review

Since the beginning of this year, there has been an increasing trend in kidnapping cases targeting encryption users, with victims including core members of projects, industry opinion leaders, and ordinary users.

French police recently successfully rescued the father of a cryptocurrency tycoon. The kidnappers demanded a huge ransom and brutally cut off the hostage's fingers to pressure the family.

At the beginning of the year, a co-founder of a well-known hardware wallet company and his wife were attacked at their home by armed assailants. The kidnappers also resorted to the brutal method of severing fingers and filming the act, demanding a ransom of 100 bitcoins.

In early June, a suspect in the planning of multiple kidnappings of French encryption entrepreneurs was arrested in Morocco. This suspect was wanted by Interpol for charges including "kidnapping and unlawful detention of hostages."

In New York, an Italian cryptocurrency investor faced a more harrowing experience. He was lured to a villa, where he was subsequently imprisoned and tortured for three weeks. The criminal gang used tools like chainsaws and electric shock devices to threaten him, even suspending him from the rooftop of a high-rise building to force him to hand over his wallet's private key. Disturbingly, the assailants seemed to have some understanding of blockchain technology, as they accurately targeted him through on-chain analysis and social media tracking.

In mid-May, the daughter of a co-founder of a cryptocurrency trading platform and her young grandson were nearly forcibly dragged into a white van on the streets of Paris. Fortunately, due to the victim's fierce resistance and timely assistance from passersby, the kidnapper ultimately fled in a panic.

These cases indicate that, compared to on-chain attacks, offline violent threats are often more direct, efficient, and have a lower implementation threshold. It is noteworthy that the suspects in several cases are mainly aged between 16 and 23, and they generally possess basic knowledge of encryption.

In addition to these publicly reported cases, some security teams have also found that during offline transactions, some users encountered control or coercion from the other party, resulting in asset damage.

In addition, there are some "non-violent coercion" incidents that have not escalated to physical violence. For example, attackers threaten victims by掌握 their private information or whereabouts, forcing them to transfer funds. Although these situations do not result in direct personal injury, they have already touched upon the boundaries of personal safety.

It is important to emphasize that the disclosed cases may only represent a small part of the problem. Many victims choose to remain silent for various reasons, making it difficult to accurately assess the actual scale of off-chain attacks.

Crime Chain Analysis

In 2024, a research team from the University of Cambridge published a paper that systematically analyzed cases of global encryption users encountering violent coercion, revealing the attack patterns and defense challenges in depth.

Based on multiple typical cases, we can summarize that the crime chain of wrench attacks usually includes the following key links:

1. Information Locking

Attackers often start with on-chain information, combining transaction behavior, label data, NFT holdings, etc., to preliminarily assess the scale of target assets. At the same time, statements on social media, public interviews, and even some leaked data also become important auxiliary sources of information.

2. Realistic positioning and contact

After determining the target identity, the attacker will attempt to obtain information about their real-life circumstances, including residence, frequently visited places, and family structure. Common methods include:

• Induce the target to leak information on social platforms.
• Use public registration information (such as domain registration details) for reverse lookup
• Use the leaked data for reverse search
• By tracking or false invitations, bring the target into a controllable environment.

3. Violent Threats and Extortion

Once the target is controlled, attackers often resort to violent means to force them to hand over their wallet private keys, mnemonic phrases, and secondary verification permissions. Common methods include:

• Bodily harm
• Coerce the victim to perform the transfer
• Threatening relatives and requiring family members to transfer funds on their behalf

4. Money Laundering and Fund Transfer

After obtaining the private key or mnemonic phrase, attackers usually quickly transfer assets, using methods that include:

• Use mixing services to obscure the source of funds
• Transfer to a controlled address or a non-compliant trading platform account
• Liquidate assets through OTC channels or the black market

Some attackers have a background in blockchain technology, are familiar with on-chain tracking mechanisms, and will deliberately create multi-hop paths or cross-chain obfuscation to evade tracking.

Countermeasures

In extreme scenarios of personal threats, using multi-signature wallets or decentralized mnemonic techniques is often impractical and may even exacerbate violent behavior. In response to wrench attacks, a more prudent strategy should be "give and take, with manageable losses":

• Set up an inducement wallet: prepare an account that appears to be the main wallet but actually holds only a small amount of assets, to be used for "stop-loss feeding" in times of danger.
• Family security management: Family members need to understand the location of asset storage and response strategies; set up a security word to convey danger signals in case of unusual situations; enhance the security settings of home devices and physical protection of the residence.
• Avoid identity exposure: do not flaunt wealth or share transaction records on social platforms; be cautious in revealing information about your holding of encryption assets in real life; manage your social circle information well to prevent acquaintances from leaking information. The most effective protection is always to make people "not know you are a target worth monitoring".

Conclusion

With the rapid development of the encryption industry, understanding your customer ( KYC ) and anti-money laundering ( AML ) systems play a key role in enhancing financial transparency and preventing illegal fund flows. However, during the implementation process, especially in terms of data security and user privacy, there are still many challenges. For example, the large amount of sensitive information collected by platforms to meet regulatory requirements (such as identity, biometric data, etc.) can become a target for attacks if not properly protected.

Therefore, we recommend introducing a dynamic risk identification system based on the traditional KYC process to reduce unnecessary information collection and lower the risk of data breaches. At the same time, the platform can connect with professional anti-money laundering and tracking platforms to assist in identifying potential suspicious transactions, thereby enhancing risk control capabilities from the source. On the other hand, data security capability building is equally indispensable; professional red team testing services can provide the platform with attack simulation support in real environments, comprehensively assessing the exposure paths and risk points of sensitive data.