In December, a man named Louis Meza arranged to meet a friend known to have a substantial fortune in Ethereum. Meza and an accomplice abducted the victim, while Meza went to his home and stole the device containing his digital wallet. Meza then forced the victim to transfer $1.8 mln worth of Ether to an address belonging to Meza. Fortunately, police were able to apprehend Meza, although the accomplice has yet to be captured.
With the dramatic increase in the value of cryptocurrencies over the last year, there has also been a marked increase in criminal activity against those with large and valuable investments.
While some hackers target exchanges, online wallets and the like, others target individual crypto owners with physical violence.
Despite the existence of ultra-secure hardware wallets, safes and safety deposit boxes, owners of digital currency find themselves vulnerable to the so-called “$5 wrench” attack.
Targeting crypto holders
Owners of cryptocurrency are more susceptible to this kind of attack due to the liquidity of their investment and the lack of middlemen. Stealing from a wealthy stockholder is a much more complicated process, involving brokers and limited business hours.
Those with large bank accounts have to somehow be transported to the bank and forced to comply with the robber (in a very public venue). The robber has to hope the victim can deceive bank employees into thinking nothing's wrong. It’s complicated and challenging.
On the other hand, most crypto owners can access their wallets immediately, from home 24 hours a day. They can transfer their assets quickly under duress, without the involvement of any intermediaries and without scrutiny from prying eyes. Since digital currency is more-or-less anonymous, a well-executed heist could be covered up much more easily.
Jameson Lopp of BitGo recommends taking greater precautions against the $5 wrench attack. He has posted images on Twitter (part) of his security measures:
Additionally, Lopp advocates storing your digital currency in multisig wallets. This would make it impossible for a thief to force you to transfer your wallet contents to them since you don’t have sole control of your funds. Other measures, such as securing your hardware wallet in a bank safety deposit box, would provide protection as well. The key is to make it as difficult as possible to steal your money, ideally by ensuring it isn’t readily available in the event you’re held up.