Safeguard Your Bitcoin: Physical Holdups of CryptoCurrencies Are Becoming More Frequent

Cryptoeconomics has brought greater security in transactions with distributed accounting, as well as the possibility of anonymity in financial transactions. In particular, being able to make transfers and payments anonymously provides great advantages in favor of the privacy of cryptocurrency users.

But you know that we never stop warning you that the future is always unpredictable, and that no software can be 100% foolproof. In fact, anonymity is proving to also have a sinister B-side, which is beginning to pose a risk to the physical security of Bitcoiners.
The first known case of physical robbery with virtual theft occurred a few months ago in NYC

The reality is that Bitcoin has also brought new forms of crime. These new forms of crime are not limited only to the numerous cases of theft of cryptocurrencies on the Internet, or ransomware that requires payment in Bitcoins. There are also live robberies whose sole purpose is to steal Bitcoin from the victim.

The first alarms were sounded when a few months ago in New York, the first case of express kidnapping of a person with cryptotokens as a target was reported. The criminals knew that this person kept an important part of their money in Ethers, and they kidnapped him with the purpose of transferring his tokens to a crypto-port controlled by the kidnappers during the brief captivity.

Louis Meza, the victim, met with a friend of his in his apartment for reasons that are unknown. He then went outside and climbed into a van that was supposed to be from a transport company. The van not only did not take him anywhere, but inside was a person who told him at gunpoint to give him his wallet (physical), his house keys, and his mobile phone.

Then the criminals entered the apartment and took the keys that guaranteed access to the virtual wallet of the victim and his long-awaited Ethers. Totally anonymous Ethers worth $1.8 million were transferred to a virtual wallet controlled by the criminals. The anonymity of the tokens served as shield to the robbers to leave no trace of their action, but the involvement of the friend with whom the victim met allowed the police to open an investigation that resulted in the arrest of the criminals who perpetrated the robbery.

The cases of face-to-face robberies in Bitcoins begin to proliferate

But the previous case has not been an isolated one. Lately, the cases of physical robberies with virtual theft have proliferated. The characteristics of anonymity provided by cryptocurrencies are the ideal breeding ground for this proliferation, in addition to the mobility and availability of access to their tokens at all times by users.

A few days after the case of the express kidnapping in Manhattan, Pavel Lerner, a manager of a cryptocurrency broker, was kidnapped during his stay in Kiev by six armed hooded men who forced him into a van with stolen license plates. The modus operandi was very similar to the previous case, as well as the motive of the kidnapping. Lerner’s company ended up paying a ransom in Bitcoins that amounted to $ 1million.

Later there have been more similar cases, in which the victims have been held against their will, and have only been released after transferring their cryptocurrencies to virtual portfolios controlled by the criminals. The New York Times has made a detailed summary of most of them, ranging from the kidnapping of a Russian tourist in a holiday resort in Phuket (Thailand) with a ransom that amounted to $100,000 in Bitcoins, to one that occurred in Palm Beach (Florida) with a theft of $28,000.

As is almost always the case, legislation and specific police measures are behind the development of events. That is why, in the meantime, unfortunately, responsibility falls on citizens and users to adopt the most appropriate prevention measures in order to minimize the likelihood of falling victim to this new type of crime.

The most appropriate measures that you can take as a crypto user

Let’s specify the most appropriate ways (as much as possible) to take action against these express kidnappings. The first thing to do is avoid having instant or online access to the bulk of your cryptocurrencies. Of course, this point is uncomfortable and not very agile, but it guarantees a level of non-immediacy that can throw the friends of your Bitcoins far behind.

The infrastructure that criminals need to get their tokens if you can access them at any time is to keep you for a few minutes in a room or vehicle. If, on the other hand, you make your own access to your cryptocurrencies difficult, it also makes it difficult for would be criminals, considerably increasing their risk. Security versus discomfort: that is the tradeoff.

In a previous analysis, we talked about cold storage options with tokens guarded in underground bunkers, and with deferred access to your cryptocurrencies after having requested their withdrawal. This option, while adding a degree of difficulty for criminals, can be a double-edged sword, since you can still access your Bitcoins from anywhere, including from where you are held by your captors.

Deferred withdrawal may end up having the opposite effect, and result in the criminals prolonging the agony of their kidnapping during the day or two that it takes you to be able to withdraw tokens from your Smartphone, and dispose of them to transfer them to the virtual wallet controlled by criminals.

Indeed, if you have your money in a bank account, with the help of online banking, you are exposed to an (apparently) similar risk. But it is not exactly the same. The fact that traditional banking is composed of centralized entities, makes them intensively monitor suspicious transactions, and contact customers and have protocols to verify the situation. This doesnt happen in the cryptoeconomy, since it is decentralized by nature, and no entity supervises its transactions today.

Indeed, this would not have prevented the previous case of robbery of Ethers in New York, but if you store that “paper wallet” in a safe deposit box rented in a bank office , you add a degree of physical security and traditional interface that can be key for criminals to choose another victim.

The operation would consist of having a reduced virtual portfolio for the current (or exceptional) expenses that you need to make, and on the other hand that paper wallet, physically guarded. The discomfort is that, periodically, as you need more funds, you would have to go to your bank office, open the safe deposit box, and remove a few more tokens from your virtual wallet. But this discomfort is not far from the usual procedure with traditional banking, and you will agree that it gives you an essential extra security.

And remember, the most effective measure is prudence and being reserved

We will close today’s analysis by revealing how often other measures are simple common sense. I tell you this because I remember the case of a neighbor who always for robbed while on a summer vacation. This neighbor, two months before leaving summer, was already bragging to anyone who would listen about his exotic travel plans.

Do not forget that prudence has always been a good counselor, as well as the best ally of personal security. Do not make the mistake of saying cheerfully that you have all your money in Bitcoin. But of course, the issue is what will happen when every citizen happens to have all their money in tokens. Then, would be robbers will know that anyone they assault on the street is a potentially propitious victim.

That’s where the “paper wallet” tactic we mentioned earlier comes into play. Criminals have a very complicated situation if they have to get you into your banking agency. Stay safe everyone.

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