Shadows of the Blockchain World: Off-chain Attacks and Physical Threats

The risks in the blockchain field are spreading from the virtual world to real life. We are accustomed to discussing technical threats such as on-chain attacks and smart contract vulnerabilities, but a series of recent events remind us that the security of the physical world is equally important.

Last year, a cryptocurrency billionaire was the target of a near-successful kidnapping attempt. Attackers tracked the victim's movements using GPS tracking, forged documents, and other means, launching the attack as the victim was returning home. Fortunately, the victim fought back fiercely and ultimately managed to escape. This incident has sparked widespread concern in the industry regarding off-chain security.

As the value of crypto assets continues to rise, physical attacks targeting industry participants are becoming increasingly frequent. This article will delve into the methods of these attacks, review typical cases, explore the underlying criminal networks, and propose practical prevention suggestions.

Wrench Attack: A High-Efficiency Threat with Low Technical Barriers

The concept of "wrench attack" originates from a webcomic that satirizes the fact that even with the most powerful technological defenses, it is difficult to resist simple physical threats. Attackers do not need advanced technology; they only need a wrench to coerce victims into handing over their passwords or assets.

A Shocking Case Review

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

In May, French police successfully rescued the father of a crypto billionaire. The kidnappers demanded a huge ransom and cruelly severed the victim's fingers to pressure the family.

In January, a co-founder of a well-known hardware wallet company and his wife were attacked at home. The kidnappers also used extreme measures such as finger amputation, demanding 100 Bitcoins.

In June, a suspect involved in planning multiple kidnapping cases of French cryptocurrency entrepreneurs was arrested in Morocco. The suspect is accused of participating in the kidnapping of the founder of the aforementioned hardware wallet company.

A case that occurred in New York is even more shocking. An Italian crypto investor was imprisoned for three weeks and tortured with chainsaws, electric shocks, and other forms of torment. The criminal gang precisely identified their target through on-chain analysis and social media tracking.

In mid-May, the daughter and young grandson of a co-founder of a certain trading platform narrowly escaped a kidnapping in Paris. Fortunately, bystanders intervened in time, which prevented a tragedy.

These cases indicate that, compared to on-chain attacks, off-chain violent threats are more direct, efficient, and have a lower implementation threshold. It is noteworthy that many of the individuals involved are relatively young, concentrated between the ages of 16 and 23, and possess basic knowledge of cryptocurrency.

In addition to publicly reported cases, the security team found that some users encountered control or coercion during off-chain transactions while analyzing the information submitted by users, resulting in asset loss.

In addition, there are some "non-violent coercion" incidents, such as attackers using the private information they possess to issue threats. Although these situations have not caused direct harm, they have touched upon the boundaries of personal safety, and whether they should be classified as "wrench attacks" is still up for discussion.

It is important to emphasize that the exposed 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.

Analysis of the Crime Chain

According to the analysis by the research team at Cambridge University, the criminal chain of a wrench attack typically includes the following key links:

1. Information Locking Attackers first analyze on-chain data to assess the scale of target assets. At the same time, they combine social media information, public interviews, and other auxiliary intelligence sources.

2. Reality Positioning and Contact After determining the target, the attacker will seek to obtain their real identity information. Common methods include social media inducements, reverse lookup of public information, and exploitation of data leakage information.

3. Violent Threats and Extortion Once the target is controlled, the attacker often uses violent means to force them to hand over private keys, mnemonic phrases, and other key information.

4. Money Laundering and Fund Transfer After gaining access, the attacker quickly transfers assets, evading tracking through mixers, cross-chain operations, and other means.

Coping Strategies

In the face of wrench attacks, traditional multi-signature wallets or distributed mnemonic techniques may not be practical. A more prudent strategy is "give to gain, and keep losses controllable":

• Set up an inducement wallet: Prepare an account that looks like the main wallet but only holds a small amount of assets for "stop-loss feeding" in case of emergencies.
• Family Security Management: Family members should master basic asset management and response knowledge; set up a security code; enhance physical safety at home.
• Avoid identity exposure: Manage social media information carefully and avoid revealing crypto asset holdings in real life.

Conclusion

With the rapid development of the cryptocurrency industry, KYC and AML systems play an important role in enhancing financial transparency. However, there are still many challenges in the implementation process, particularly in terms of data security and user privacy protection.

It is recommended to introduce a dynamic risk identification system based on the traditional KYC process to reduce unnecessary information collection. At the same time, the platform can consider integrating professional anti-money laundering and tracking services to enhance risk control capabilities from the source. Additionally, strengthening data security capacity building is equally important, and a comprehensive assessment of system risks can be conducted through professional security testing services.

In this increasingly complex world of cryptocurrency, staying vigilant and enhancing security awareness will be a mandatory lesson for every participant.