The Dark Side of the Blockchain World: Real Threats Faced by Encryption Users

As the value of encryption assets continues to rise, physical attack incidents targeting cryptocurrency users are frequent. This article will delve into the methods of such attacks, typical cases, the criminal chain, and propose practical prevention recommendations.

Definition of Wrench Attack

The concept of "wrench attack" originates from web comics, describing a behavior where attackers force victims to hand over passwords or assets not through technical means, but by using threats, extortion, or even kidnapping. This method of attack is direct, efficient, and has a low barrier to implementation.

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 subjected the victim to cruel treatment.

In January, a co-founder of a hardware wallet company and his wife were attacked at home by armed assailants, who also inflicted serious injuries on the victims and demanded a payment of 100 bitcoins.

In New York, an Italian crypto investor was lured to a villa, where he was held captive and tortured for three weeks. The criminal gang used various methods to threaten the victim, forcing him to hand over his wallet private keys.

In mid-May, the daughter of a co-founder of a cryptocurrency trading platform and her young grandson were nearly kidnapped on the streets of Paris, but fortunately, they were rescued with the help of passersby.

These cases indicate that, compared to on-chain attacks, offline violent threats are more direct, efficient, and have a lower threshold. The attackers are mostly young people, aged between 16 and 23, with basic encryption knowledge.

In addition to the publicly reported cases, the security team has also noted that some users have encountered control or coercion from the other party during offline transactions, resulting in asset damage. Additionally, there are some "non-violent coercion" incidents, where attackers threaten victims by leveraging their private information.

It is important to emphasize that the disclosed cases may only be the tip of the iceberg. Many victims choose to remain silent for various reasons, which makes it difficult to accurately assess the true scale of off-chain attacks.

Crime Chain Analysis

The criminal chain of wrench attacks roughly includes the following key links:

1. Information Locking: Attackers usually start from on-chain information, combining transaction behavior, tagging data, and other factors to initially assess the scale of target assets. At the same time, social media and public information also become important sources of intelligence.

2. Reality positioning and contact: After determining the target identity, the attacker will attempt to obtain their real identity information, including residence, frequently visited places, and family structure. Common methods include social media inducement, public data reverse lookup, data breach reverse search, etc.

3. Violent threats and extortion: Once the target is controlled, attackers often use violent means to force them to hand over wallet private keys, mnemonic phrases, and two-factor authentication permissions.

4. Money Laundering and Fund Transfer: After obtaining the private key or mnemonic phrase, attackers typically transfer assets quickly, using methods such as mixers, transferring to controlled addresses, or non-compliant exchange accounts. Some attackers with a background in Blockchain technology intentionally create complex paths to evade tracking.

Countermeasures

In the face of a wrench attack, a more prudent strategy should be "give what you can, and ensure losses are controllable":

• Set up an inducement wallet: Prepare an account that appears to be the main wallet but only holds a small amount of assets, to be used for "stop-loss feeding" in case of danger.
• Family Security Management: Family members need to master the basic knowledge of asset locations and responses; set up a security word to signal danger in case of unusual situations; strengthen the security settings of home devices and the physical security of the residence.
• Avoid identity exposure: Avoid flaunting wealth or sharing transaction records on social platforms; avoid revealing possession of encryption assets in real life; manage your circle of friends' information to prevent leaks from acquaintances.

Summary

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 capital flows. However, during the implementation process, especially in terms of data security and user privacy, there are still many challenges.

It is recommended to introduce a dynamic risk identification system based on the traditional KYC process, reducing unnecessary information collection to lower the risk of data leaks. At the same time, the platform can connect with professional anti-money laundering and tracking platforms to assist in identifying potential suspicious transactions, thus enhancing risk control capabilities from the source. On the other hand, building data security capabilities is equally essential, and the platform can seek support from professional security teams to comprehensively assess the exposure paths and risk points of sensitive data.