Cryptocrats report growing interest in services amid the increasing frequency of so-called “dollar wrench attacks” on cryptocurrency traders, investors and project leaders.
Last year, several famous wrench attacks (physical attempts to steal someone’s code) have targeted prominent investors and business executives in the blockchain industry.
The “not your key, not your coin” crypto mantra lost its power among investors who fear personal security. Cold wallets have full control over your digital assets, but also present one point of attack.
As crypto adoptions continue to rise and wrench attacks continue to surge in more valuable crypto investors, custodians are seeing a shift in preferences from independence to institutional management.
Crypto wrench drives security demand
Wrench attacks are nothing new. Jameson Rop, a supporter and chief technology officer for Bitcoin (BTC) at Bitcoin Wallet CASA, has published a GitHub repository since 2014 that records hundreds of such cases. These were only reported in the news.
Over the past two or three years, attacks have become more common and refined as code adoptions have expanded and become more mainstream than ever before. In January 2025, the founder of Crypto Wallet Ledger and his wife, David and Amandine Balland, were lured, taken to another location, and held at ransom.
Related: Rising violent crypto robbery: Six attacks targeting investors
Just a few months later, the daughter of the Exchange founder rarely fought against the attackers who tried to lure her in a van on the streets of Paris. Due to concerns over the increased attacks and similar methods, French Minister of Home Affairs Bruno Leciro met with cryptocurrency experts to discuss the issue.
As concerns about these attacks grow, cipher custodians are noticing an increase in interest in services.
Emma Shi, storefront and in-house sales director at Hashkey, a custody and exchange services provider, told Cointelegraph:
Shi said Hashkey’s custody business is growing interest in storage from “family offices, high net individuals from code sources, and even those with nest eggs large enough for theft.”
https://www.youtube.com/watch?v=hf08So8tlei
Cold wallets have long been praised by Crypto Advocates as a way to get full control of their assets and maximize their protection offline. However, this single key also provides a “single point of failure” according to Wade Wang, CEO of Multiparty Computation (MPC) Crypto Custody Service Safeheron.
Wang said there is a “flight to security” among Crypto investors. There, the holders said “we are actively seeking innovative solutions that eliminate the single point of not being able to significantly raise the bar due to attack.”
Already in 2023, a report from Pricewaterhows Cooper on digital custody focuses on the challenges that cold wallets are prone to theft and loss. One of the solutions assumed in the report was the MPC or multi-signature wallet option.
Can storage services stop wrench attacks?
Crypto-independence boasts new technology, but throughout history we encounter the same problems as treasure troves. They were vulnerable to physical attacks and theft until they were able to share that risk with stronger and safer institutions like banks. Taking a bank is much more difficult than taking someone.
Similarly, Crypto investors are now hoping to “raise the cost” of a $5 wrench attack. Wang said investors “want to go back to basic principles: to increase the cost of attackers exponentially. If, for example, it costs $3 million to steal $10 million, the incentive for an attack will be lost.”
Third-party custody can achieve this, alleviating the wrench attack issue, adding time locks and approval layers, and shifting targets from individuals to custodian employees.
“But that’s not the best solution,” Wang. Trust remains in a single centralized facility, and even major regulated crypto businesses are vulnerable to employee fraud and phishing, as exemplified by recent violations at Coinbase and Bybit.
Related: Lessons from Bibit Hack: How to Keep You Secure with Crypto Exchange
Wang suggests that distributed custody, such as MPC, is a great solution because it “resolves the problem fundamentally. The core principle of MPC is to use technology to distribute a single point of control and risk (…) into a “multiparty” structure. ”
In such a system, no control belongs to any, so transferring funds requires complex consensus protocols from multiple parties.
Decentralized solutions could better reflect the spirit of the blockchain industry, but “we cannot ignore the benefits of centralized custodians,” Wang said. “Reliable security measures provide a better guarantee of keeping client assets safe. This is a familiar way for many new crypto players.”
If the public image of a crypto investor is roaming around in a cold wallet full of Bitcoin, then concentrated or decentralized crypto investors can still be at risk.
“Risk awareness is also important. Attackers assume that more encryption held in detained solutions could block opportunistic attacks, as owners often store their own funds.”
Wrench attacks “temporary problems” resolved by adoption
The public’s perception is certainly changing. According to a 2024 report from Ernst & Young, retail investors are increasingly making some of the cryptocurrencies in their portfolios. New regulations in large financial markets like the EU and the US create the necessary framework for institutional investors to engage.
This change in regulations has been good for the custody industry as it “justifies professional custody for everyday investors and brings more provisions not only from companies from crypto origins but traditional banks,” Shi said.
“We are seeing accelerated adoption of crypto in regions with regulatory clarity, creating a whole new custody consideration for investors who previously relied solely on self-obligatory solutions.”
The regulations also raise the interests of wrench attacks, according to Wang. A better regulatory framework that “actively sets robust regulations” for more jurisdictions “inevitably leads to more serious law enforcement actions, significantly increasing the cost of such attacks and fundamentally suppresses such actions.”
“I consider a physical attack a temporary challenge,” Wang concluded.
The crypto industry has evolved through many stages, but the rise of wrench attacks on prominent investors and executives indicates that traditional financial markets have not yet reached maturity.
In the meantime, executives are not only moving assets into centralized and decentralized custodians, but also finding their own muscles. Individual security companies have seen an increase in interest from Crypto’s elite to protect their homes and people.
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