The crypto markets are a boiling pot of innovation and disruption, however it’s also sadly become the underworld for many scammers, bad actors and downright scumbags.
This guide is dedicated to the ‘$5 Wrench Attack’, a method thieves can use to coerce you into sending them your Bitcoin (BTC) – or face threats, harm, violence or worse. This piece of educational content has been created to inform and protect you from such evils in NZ.
What is a $5 Wrench Attack?
A $5 wrench attack, derived from a well known xkcd comic, represents the idea that no matter how secure your digital systems are, (including your wallets), a physical threat from a criminal wielding a $5 wrench they purchased moments before could potentially be used to force you to reveal sensitive information, passwords, your crypto wallet, or devices.
The $5 wrench attack illustrates that no matter how intricate your security is, a stranger yielding a weapon can coerce you into sending them your Bitcoin or other crypto assets.
Overseas there have been reports of gangs of people kidnapping high net worth crypto individuals and demanding ransom, and using violence and torture to extract information.
The perpetrators of these attacks are often experienced, sophisticated, professional criminals, who only need to know your real life location to carry out such an attack.
How To Prevent This Happening
Your best bet to prevent a $5 wrench attack is to stay humble, stay private, keep your holdings to yourself, practice situational awareness, skepticism, and use decoy wallets.
We’d also recommend developing a wallet recovery protocol in the case that you are ever locked out of your devices, or they are stolen, so you can regain access to your coins.
Don't Brag about Your Gains or Holdings
In the crypto world, there’s an unspoken rule to never brag about your crypto holdings.
Unless you’re operating under an alias, it’s easy to track down the location of a person using their name alone. Although there is a small chance of this happening, $5 wrench attacks have happened in New Zealand before so the best way to prevent this is by simply keeping knowledge of your crypto holdings to yourself. You wouldn’t after all, post on some random forum telling the world you have your gold bars buried in your back yard.
Leverage the Power of Decoy Wallets
In the case some bastards come to your home, and demand you transfer your crypto to them or face violence, one method you may find helpful is to have a wallet set aside for if this ever happens. Holding only a small portion of your portfolio, which you can claim is your sole Bitcoin wallet in a ransom situation – ensuring your main holding is elsewhere.
In the Trezor hardware wallet, there’s a hidden wallet feature where you can consider storing the bulk of your assets in – keeping a smaller decoy stash on your main wallet account. In the case of a $5 wrench attack, when you open your wallet it will mainline to your standard Trezor accounts. Just keep in mind that if they steal your wallet and your passphrase, it’s likely they will sooner or later discover your hidden wallet – so beware.
Practice Situational Awareness & Skepticism
If you’re inviting someone to your home to conduct a P2P trade that you’ve never met, you’re essential taking a bet that they are trustworthy, and won’t screw you over. The sad reality is that for atleast every 5 good P2P traders, there will be 1 shithead who is willing to steal your crypto, throw you under the bus and scam you in some form. You should always expect that your P2P trader counterpart could be a scammer. We’d recommend reading our P2P Trading Guide as that showcases many of the common scams in NZ peer-to-peer.
Cryptocurrency NZ Final Verdict
The general takeaway is to be mindful that situations like this have happened before, and can happen when you least expect it. Always be careful when conducting P2P traders or engaging with others in the crypto space – you can never really know their true intentions.
Hopefully this guide provided value in one way or another, feel free to explore the rest of our website to learn more about how to safely operate in the exciting world of NZ crypto.