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Stealing Bitcoin with a figurative wrench. From American Public Media, this is Marketplace Tech. I'm Novosafo. Last month, on a Friday morning in an upscale neighborhood in New York City, a 28-year-old man ran out of an eight-bedroom townhouse, flagged down a traffic agent, and said he had been held captive for several weeks by two men trying to steal his cryptocurrency holdings.
The man, a visitor from Italy, told police he had been tortured, beaten, at one point dangled off a five-story ledge, all to get him to reveal his Bitcoin password. Recent reports of similar attacks have emanated from France, Britain, Canada, and several states in the U.S. There have been home invasions, kidnapping attempts, and people held captive. Experts call these wrench attacks, a nod to a meme about robbing someone with a wrench as a weapon.
To help explain the rise in these incidents, we turn to Ari Redbird, global head of policy with the blockchain intelligence firm TRM Labs. You know, I spent about 11 years as a federal prosecutor and I spent much of that time on violent crime, violent street crime. And then the rest of that time I spent in the national security section working on cyber crimes, trying to stop bad actors from stealing and raising funds. And what's so scary to me about this spate of attacks is it really combines ideas
The very worst of both worlds, right? The speed of cybercrime, being able to steal funds at the speed of the Internet with old school violent crime. You combine those two and it becomes very, very scary. And why have we seen these attacks on the rise over the last few years?
I think for a number of reasons. Look, criminals always go to where the money is. That is true in sort of every era of criminal activity. I think people don't realize often that the FBI was born really out of the Model T, right? All of a sudden, we saw cross-border crime that we had never seen before on a national scale. So we needed a national law enforcement entity. And criminal...
Criminals are always going to go where they can move faster and steal more. And that's really what we're seeing here today. The money has moved in large part to cryptocurrencies and there are sort of this new wealth creation going on. And we're seeing bad actors target where the money is. I will also say another really important piece of this is crypto money.
Builders, crypto entrepreneurs, crypto investors tend to be high profile in many instances. They're on social media. They are speaking at conferences. They're very out there. And that presents a pretty ripe target also for criminals. There's also this perception, I understand, that...
If you just get to those folks, take their Bitcoins, it's untraceable because the whole concept of cryptocurrency is you can, you know, move value around without the government's peering eyes. Is that really the case? And is that also fueling this problem? I think the paradox of crypto is that certainly cyber criminals, and in this case, violent criminals can now steal funds in larger amounts and move them more quickly than ever before.
But to your question, it's a great one. Law enforcement can now use tools like TRM to track and trace those funds in ways that were impossible in the traditional financial system. And just to interrupt you, TRM being the organization you work for, you guys have software that helps track.
the movements of money. That's exactly right. So law enforcement, think every three-letter law enforcement agency in the U.S. and many, many globally are using TRM's tool to track and trace the flow of funds, ultimately to build investigations and stop bad actors. So for example, there's a really great example of a Coinbase case recently where there was a ring of robberies and home invasions
up and down the East Coast of the United States. Well, ultimately, the criminals try to steal funds from the victim's Coinbase account.
Coinbase used TRM, worked with law enforcement to track and trace the flow of funds to ultimately make arrests in that case. And it turned out it was the longest sentence that any criminal has ever received in a crypto-related case, about 47 years for the ringleader in this series of home invasions. So the reality is that on the one hand,
Criminals can now steal and move funds faster. But on the other hand, we can now track and trace those funds on open blockchains, right? Open blockchains are public ledgers that are traceable, trackable, they're immutable. And now law enforcement can track and trace those funds to ultimately recover them, investigate cases, and ultimately go after bad actors.
What's the ratio of those that get away versus the funds that are recovered or traced? And how easy is it to trace them? So it's relatively easy to trace them with sophisticated tools. And there's a cadre of law enforcement globally that are very, very good at tracking and tracing funds on the blockchain. Where
Where we lose visibility is when those funds move into the real world, when they're cashed out. And then you're sort of in that whole world where we've always been, where you have networks of shell companies and hawalas and high value art and bulk cash smuggling. And those things are traditionally very hard. So really what this becomes is a race from law enforcement using tools like TRM to the off ramps to ensure that bad actors have to keep those funds on chain as opposed to move them off chain where they can use them.
We'll be right back.
Investing is risky. Robinhood Financial LLC member SIPC is a registered broker-dealer. Cryptocurrency services are offered through an account with Robinhood Crypto LLC, NMLS ID 1702840. Robinhood Crypto is licensed to engage in virtual currency business activity by the New York State Department of Financial Services.
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You're listening to Marketplace Tech. I'm Novosafo. We're back with Ari Redbird, Global Head of Policy at TRM Labs, who is speaking with us about the rise of attacks aimed at stealing people's cryptocurrency holdings. What's the best remedy here for the rise of these attacks if folks are trying to think about, OK, well, maybe I invest a little bit here or there or I have a few bits of a Bitcoin holdings?
How do people protect themselves against these threats? Well, I think, first of all, the perspective is also important. We've seen, obviously, a spate of these recently, and they're very high profile. But they're also going after individuals with serious wealth in the crypto space. So this is not necessarily where we're seeing, you know, subway robberies like we would do on cell phones or other types of activity.
That said, there are certainly things that you can do. Physical security is really important. High net worth individuals often have physical security as well as digital security alarms, alarm systems, that sort of thing. The other thing you can do is have digital security. Oftentimes, one holder shouldn't be the exclusive holder of the private keys. It could be divided with
within a number of different individuals. We call that multi-signature, where it doesn't just require one person's signature, but multiple people's signatures in order to access those funds. I would say also the other one that might be the hardest is to keep private.
which none of us are great at, but in the age of the internet. But I think keeping a lower profile, particularly in this moment, where we do see criminals targeting the crypto ecosystem at unprecedented speed and scale is probably good advice. I mean, the ultimate goal in the crypto industry is to have everyone using it and using it not just as a store of value, but to actually use it for transactions.
When you see these kinds of attacks and people being targeted for the funds that they hold in cryptocurrencies and the ease of moving that money and how quickly they can be moved,
Is it exposing something fundamentally that's a problem with the idea of crypto and using it as the way of like conversing throughout the economy? Yeah, it's a really interesting question. And I think it's a bit of a paradox, right? Crypto removes intermediaries from financial transactions, which is the promise of the technology, right? It's cross-border value transfer at the speed of the internet without a bank, right? Without a middleman.
Intermediaries are slow. Wire transfers take time. The promise of crypto is that you can move funds very quickly without that intermediary, but that has caused this spate of robberies, right, where you can grab someone's private keys and ultimately steal their funds at the speed of the internet.
I think what to your question, what we really, really need to do in terms of the crypto ecosystem is build a security layer into that process. And that means multi-signature authentication. That means ensuring that law enforcement have the tools that they need like TRM to track and trace those funds. It means having physical security for crypto investors, high net worth individuals.
So I think there's a spate of things that could be done here. But it is a really interesting paradox where all of a sudden the speed of cryptocurrency and cross-border value transfer becomes a bug as opposed to the capabilities of the technology. That was Ari Redbird at TRM Labs. Daniel Shin produced this episode. I'm Nova Safo, and that's Marketplace Tech. This is APM.
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