The Rise of Crypto Custody: How Investors are Fighting Back Against “Wrench Attacks”
In the world of cryptocurrency, a new threat has emerged: the “wrench attack.” This type of attack involves physically forcing investors or managers to hand over their crypto assets, often using violent means. As the frequency of these attacks increases, crypto depot banks are reporting a surge in interest in their services. It seems that investors are finally realizing that the old mantra of “not your keys, not your coins” is no longer enough to keep their assets safe.
The Growing Problem of Wrench Attacks
According to Jameson Lopp, a lawyer and Chief Technology Officer at Bitcoin wallet provider Casa, wrench attacks are nothing new. He’s been tracking these incidents on a Github repository since 2014, and the numbers are alarming. In recent years, the attacks have become more sophisticated and public, with high-profile cases involving kidnapping, ransom demands, and even violent assaults. The increase in crypto adoption has led to a rise in these types of attacks, and investors are taking notice.
High-Profile Attacks: A Wake-Up Call for Investors
In January 2025, the founder of Crypto Wallet Ledger and his wife were kidnapped and held for ransom. Just a few months later, the daughter of an exchange founder was targeted by attackers in a failed kidnapping attempt. These incidents have raised concerns among investors and regulators, with French Interior Minister Bruno Retailleau meeting with cryptocurrency experts to discuss the issue. The concern is palpable, and investors are seeking solutions to protect themselves and their assets.
Custody Services: A Growing Trend
As the threat of wrench attacks grows, crypto investors are turning to custody services to protect their assets. Emma Shi, director of over-the-counter and institutional sales at Hashkey, notes that her company has seen an increase in interest from wealthy retail investors and family offices. These investors are seeking regulated administrators to store their assets, rather than relying on self-custody solutions. Shi believes that the perception of risk is a major factor, with attackers often assuming that owners store funds themselves.
The Limitations of Cold Storage
Cold storage has long been touted as a secure solution for crypto investors, but it’s not without its limitations. Wade Wang, CEO of MultiParty Computation (MPC) crypto custody service Safeheron, notes that cold storage provides a single point of attack, making it vulnerable to theft or loss. MPC solutions, on the other hand, use technology to decentralize control and risk, making it a more secure option for investors.
Can Custody Services Stop Wrench Attacks?
While custody services can provide an additional layer of security, they’re not a foolproof solution. Wang notes that trust is still placed in a single, centralized institution, which can be vulnerable to misconduct and phishing attacks. Decentralized solutions, such as MPC, may be a more effective way to mitigate the risk of wrench attacks. By using complex consensus protocols and decentralizing control, MPC solutions can make it exponentially more difficult for attackers to steal assets.
A Temporary Problem?
Despite the growing threat of wrench attacks, Wang believes that this is a temporary problem that will be solved as the crypto industry matures. With increased regulatory clarity and better law enforcement measures, the costs of launching a wrench attack will become prohibitively high. Shi notes that public perception is also changing, with retail investors increasingly making crypto a part of their portfolios. As the industry grows and becomes more mainstream, the need for secure custody solutions will only continue to increase.
The Future of Crypto Custody
As the crypto industry continues to evolve, it’s likely that we’ll see a shift towards more decentralized and secure custody solutions. MPC and other technologies will play a key role in mitigating the risk of wrench attacks and providing investors with greater peace of mind. While the threat of wrench attacks is real, it’s also an opportunity for the crypto industry to innovate and provide better solutions for investors. As Wang notes, the rise of wrench attacks is a sign that the crypto industry is maturing, and it’s up to investors and regulators to work together to create a safer and more secure environment for all.
