The Rising Risk of Physical Crime in the Crypto Space and Its Impact on Asset Security

The cryptocurrency ecosystem, once celebrated for its promise of decentralization and financial sovereignty, now faces a chilling reality: the rapid escalation of physical crime targeting digital assets. In 2025, the world witnessed a surge in "wrench attacks"-violent, real-world crimes where perpetrators use coercion, kidnapping, or even torture to extract private keys or seed phrases from crypto holders. These attacks are no longer isolated incidents but a systemic threat to institutional and high-net-worth investors, demanding urgent reevaluation of custody strategies and risk management frameworks.

The Escalation of Wrench Attacks: A Global Crisis

According to a mid-2025 report, over $2.17 billion was stolen from cryptocurrency services by July 2025, surpassing the total for the entire year of 2024. While cyberattacks on exchanges and protocols dominate headlines, the physical dimension of crypto crime has grown equally alarming. Wrench attacks now occur at a rate of over one incident per week globally, with victims ranging from individual investors to executives of major crypto firms.

High-profile cases in 2025 underscore the brutality of these crimes. In Paris, the daughter and grandson of a prominent crypto CEO were targeted in a daylight kidnapping attempt, while another executive's father was abducted and had a finger severed to pressure a ransom according to reports. Similarly, David Balland, co-founder of Ledger, and his partner were kidnapped in central France, with one of Balland's fingers amputated during captivity as documented. These attacks are not random; they are often preceded by data breaches at crypto exchanges, which expose victims' personal information, enabling criminals to identify and target high-value individuals according to analysis.

The correlation between Bitcoin's price surges and the frequency of wrench attacks is particularly concerning according to Chainalysis. As Bitcoin's value climbs, so does the incentive for attackers to exploit its irreversible and decentralized nature to extract wealth quickly. This dynamic creates a feedback loop: rising asset prices attract more investors, which in turn draws more criminal attention.

Institutional and High-Net-Worth Risks: Beyond Cybersecurity

Traditional crypto security measures-hardware wallets, encryption, and cold storage-are largely ineffective under physical coercion. As security experts note, a thief with a wrench can bypass even the most advanced cryptographic protections. For institutional investors and HNWIs, the risks extend beyond personal safety to operational continuity. A single compromised key can lead to catastrophic losses, eroding trust in digital assets and destabilizing portfolios.

The U.S. Department of Justice (DOJ) has taken steps to address this crisis, charging individuals in a $263 million crypto-related racketeering conspiracy that included a home invasion as reported. However, law enforcement's ability to prevent these attacks remains limited, particularly in jurisdictions with weak regulatory frameworks. Meanwhile, insurance companies are beginning to offer specialized coverage for wrench attacks, recognizing the growing threat. Yet, these solutions are reactive rather than preventive.

Strategic Solutions for 2026 and Beyond

To mitigate the risks of wrench attacks, investors must adopt a multi-layered approach that combines technological innovation, personal security, and institutional best practices.

1. Advanced Custody Solutions: MPC and Decentralized Seed Storage

Institutional adoption of Multi-Party Computation (MPC) custody solutions has emerged as a critical defense against physical coercion according to industry analysis. Unlike traditional multisig wallets, MPC splits private keys into encrypted fragments distributed across multiple parties or devices, eliminating single points of failure. This approach ensures that even if one party is compromised, the attacker cannot access the full key.

Decentralized seed storage, where recovery phrases are split and stored across geographically dispersed nodes, further reduces the risk of coercion as highlighted in industry reports. For example, Safeheron's MPC solutions allow for real-time key rotation and automated monitoring, making it harder for attackers to exploit stolen credentials as described.

2. Personal Security and Situational Awareness

High-net-worth individuals must treat their crypto holdings as a physical asset requiring real-world protection. Executive protection teams, anti-surveillance training, and secure real estate ownership are now table stakes as observed in recent cases. Additionally, avoiding public displays of wealth and using encrypted communication channels can reduce visibility to criminals.

3. Regulatory and Institutional Collaboration

Regulatory frameworks like the EU's Markets in Crypto-Assets (MiCAR) and emerging U.S. legislation are beginning to mandate secure custody practices according to industry analysis. Institutions should prioritize compliance with these standards while advocating for stricter penalties for crypto-related crimes. Collaborative efforts between exchanges, custodians, and law enforcement can also enhance threat intelligence sharing.

4. Diversification and Risk Mitigation

Investors should diversify their custody strategies, combining MPC, multi-sig, and decentralized storage with insurance policies tailored to wrench attacks as noted in industry reports. For example, some firms now offer "duress-resistant authentication systems" that trigger alerts or fake key disclosures under coercion according to technical analysis.

Conclusion: A Call for Proactive Defense

The rise of wrench attacks in 2025-2026 is a wake-up call for the crypto industry. As digital assets become an increasingly attractive target for organized crime, the line between cybersecurity and physical security is blurring. Institutional and high-net-worth investors must act now to adopt advanced custody solutions, enhance personal security protocols, and advocate for regulatory clarity. The future of crypto wealth depends on it.