Cryptocurrency’s promise of financial freedom carries a cost the industry must confront: growing wealth can make its owners more attractive targets for violent criminals. Protecting digital assets while treating the physical safety of their holders as a personal matter is an inadequate approach to financial security.

The industry must take responsibility for designing products and services which account for the reality that people can be threatened into surrendering their assets.

The rise in “wrench attacks” – physical violence or threats used to force someone to surrender cryptocurrency – exposes this vulnerability. A wallet may resist sophisticated hacking while its owner remains vulnerable to coercion. When one person can immediately authorise the transfer of substantial wealth, that person and their family can become targets of criminal coercion.

Violent criminals extracted over US$30 million from cryptocurrency holders in the first half of the year. If that pace continues, annual losses could exceed last year’s US$58 million. The industry has reason to expand its definition of investor protection beyond the risks of price volatility, account theft and platform failure. Worldwide, 46 incidents were documented through to late June – physical coercion is a serious financial security risk.

A portfolio may multiply in value while its owner’s security arrangements remain unchanged. Research has identified a correlation between bitcoin prices and reported physical attacks, but correlation alone cannot establish how much of the increase is attributable to price movements, adoption, information exposure or improved reporting.

And the threat can outlast a rally. Once someone becomes known – or is simply believed – to possess substantial cryptocurrency wealth, that reputation may persist.

Last December, masked intruders attacked a cryptocurrency investor at his home in Solihull, England, and threatened his pregnant wife. He transferred cryptocurrency worth hundreds of thousands of pounds during the 45-minute ordeal. In March, Hong Kong police received a report that a man had been assaulted in a Hung Hom hotel and robbed of cryptocurrency worth about HK$5.3 million (US$675,342). Silver worth a further HK$800,000 was also reportedly taken.

These cases reveal an uncomfortable limitation of digital security. A transaction system can check whether the required cryptographic authorisation has been supplied. That does not establish whether the person supplying it is acting freely. A holder threatened with violence may complete every required security step while acting entirely against their wishes.

Self-custody makes this problem especially important because it can place extensive financial authority in one person’s hands. That authority has genuine benefits: direct ownership, portability and reduced dependence on an intermediary. It also changes who must manage the consequences of coercion.

Conventional finance faces coercion too. Bank customers can be threatened and institutional controls can fail. But withdrawal limits, independent approvals, delays and checks for unusual activity can create opportunities for intervention. These arrangements impose costs on legitimate users, yet their protective value deserves recognition when financial products are evaluated primarily for speed and convenience.

Advice to avoid publicising wealth can be useful, but it cannot substitute for institutional responsibility. People can be exposed through records they were required to provide or through information they never intended to disclose. Responsibility for violence remains with the perpetrators.

The industry’s response should therefore address both custody design and the services surrounding it. Multiple independent approvals can reduce reliance on a single key or device. Delayed withdrawals and transaction limits may reduce the amount accessible during a short period of coercion.

None of these mechanisms guarantees physical safety. They introduce complexity and criminals may continue threatening despite technical restrictions.

Blockchain records can help criminal investigations although traceability does not automatically provide the power to freeze or recover assets. Recovery is possible in some cases: after the rescue of kidnapped Ledger co-founder David Balland and his partner, French authorities said almost all the cryptocurrency paid as ransom had been traced, frozen and seized. That outcome depended on investigators, operational intervention and institutional cooperation. It shows how the practical protection of digital ownership continues to depend on public systems.

Financial losses capture only part of the harm. An unsuccessful extortion attempt can still leave a person injured, a family displaced or a child traumatised. Even complete recovery of stolen funds cannot restore the sense of safety lost during an attack.

As cryptocurrency fortunes grow across market cycles, the industry must recognise that wealth changes its owners’ exposure to crime. Security promises should be tested against what happens when a customer is frightened, isolated or protecting a loved one. A rising valuation can make an investor wealthier. A mature financial ecosystem must also give that investor – and the people around them – credible ways to remain safe.