“When the mafia kidnapped me, I had the choice to pay the ransom in either fiat money or Bitcoin. I did not hesitate before choosing the latter. Had I
“When the mafia kidnapped me, I had the choice to pay the ransom in either fiat money or Bitcoin. I did not hesitate before choosing the latter. Had I picked the first option, the criminals would have held me in a dark, damp cell for days in the Pacific Islands until the funds went through KYC, identity check, or, God forbid, the bank placed a hold on the funds. But after I paid, I was let go instantly. Who knew the network’s 10-minute transaction time and cross-border anonymity could be such a lifesaver?”
— Dr. Anon
According to a recent report compiled by Chainalysis, the intersection between cryptocurrency and crime has grown to become a $14 billion industry in 2021. Regrettably, societies worldwide are far from perfect, and the rapid rise in the market capitalization of digital currencies has led to an explosion of crime targeting blockchain enthusiasts. The good news is that the money lost in criminal activities as a percentage of crypto’s overall market cap is actually going down.
While there is a wide range of variance in tactics, the common theme is the exploitation of individuals’ naivety and blind trust in the legitimacy of the crypto services they sign up for. The first step toward compounding gains with crypto investments is to be super diligent and to avoid losing your vigilance.
We’ve spoken to three experts to get their advice on protecting one’s hard-earned capital. First up is Dr. Anon, a Cointelegraph staff member, who, long before joining the firm, was targeted by the mafia out in the Pacific Islands for his expertise in crypto (as you may have gathered, his first security tip is to remain anonymous online to avoid letting bad guys know you even have crypto). Dr Anon is frequently abroad for work and had to think quickly to get out of quite a few dangerous situations. He explains why it’s essential to keep a low profile.
Don’t post online about your success in crypto
Dr. Anon: In many parts of the world, people remain underexposed to crypto. Their only insight comes from sensational media stories of individuals getting rich off an early investment in Bitcoin or a lucky bet on Shiba Inu. When you travel to certain countries and mention that you work/invest in crypto, the locals’ first impression about you immediately switches to that of “millionaire” or “billionaire.” It will make you far more susceptible to crimes such as robberies or kidnappings. Unless it’s someone you trust, make up a cover story about what you are doing.
In addition, some investors are very emotional about the state of affairs of their favorite coins, or are downright zealous. Be careful about posting criticism, strong negative opinions, or factual information about certain coins on social media if you have a public profile. Some blockchain fanatics could retaliate by doxxing you — posting your phone number, addresses, spouses name, etc., for a broad (possibly crazed) audience. If you have to say something deeply controversial on the internet, keep yourself anonymous.
How to protect yourself from a $5 wrench attack
Dr. Anon: Long story short, a $5 wrench attack is when someone finds out you have a lot of crypto and physically attacks or threatens you and coerces you into giving up your private keys. Very few of these attacks happen
impromptu; that is, they are highly sophisticated, carried out by “professional,” organized criminals. It’s a “your money, or your life” situation.
Suppose you became a target of kidnapping for crypto ransom. In that case, chances are the perpetrators have already scanned your LinkedIn profile, Twitter accounts, Crunchbase, public addresses listed on voter records, etc., and planned days, if not weeks, in advance to account for all the variables during the act, such as escape. The only way to access one’s private wallet is through the keys, so expect some pretty rough action if one refuses to hand them over.
That said, one can significantly limit their losses by having a “decoy” crypto wallet. In other words, don’t put all eggs in one basket. One strategy is to put, say, a small percentage of one’s crypto net worth into a separate hard wallet. Then, if a robbery, kidnapping, etc., were to occur, simply hand it over and call the police afterward. It’s a smaller loss than otherwise, and no amount of money is worth the risk of getting tortured or killed for refusing to pay.
Pulling the rug from under you
Personal security aside, the risks facing crypto investors regarding DeFi rug pulls, hacks, phishing scams, etc., are significant. In fact, Chainalysis estimates $2.8 billion worth of DeFi rug pulls took place in 2021. Cointelegraph reached out to Hank Schless, senior manager of security solutions at Lookout, for his insight on crypto…
cointelegraph.com