The Icelandic Bitcoin Heist & World’s First Bitcoin Prison Break
In February 2018, Sindri Thor Stefansson was charged with masterminding the theft of $2 million worth of Bitcoin mining rigs from mining centers on Iceland’s Reykjanes peninsula.
The biggest theft to date of its kind, lost mining revenue coupled with the cost of the still missing mining equipment itself, currently puts the total cost of the Icelandic Bitcoin heist at over $4 million. For cryptocurrency market watchers, however, Iceland’s big Bitcoin heist just took an even more dramatic twist.
The World’s First Bitcoin Great Escape
On April 18th, 2018, Reykjavík Police announced that Bitcoin heist mastermind Sindri Thor Stefansson had escaped custody. - This and that after escaping the prison holding him had fled Iceland aboard a flight bound for Sweden.
Presumed to have fled Iceland aboard a plane also carrying the Icelandic Prime Minister, the Icelandic Bitcoin heist has started to sound a lot like a Jason Bourne movie. There is just one problem. Namely, that Stefansson escaping the prison holding him and fleeing to Europe, raises serious security concerns for everyone involved with cryptocurrency.
Smart Criminals are Becoming Just as Pervasive as Smart Contracts
Coinbase, Xapo, and Bitcoin exchanges like Cex, all offer offline cold storage of digital assets. This means that cryptocurrency stored on such exchanges, can’t be stolen by virtue of Mt Gox like hacks. - What would happen, however, if a rouge data center employee decided to steal physical servers and storage devices themselves?
What a Cryptocurrency Crime Wave Could Look Like
The idea of organized criminals raiding cryptocurrency data centers might sound sensational. In truth, though, the recent Icelandic Bitcoin heist is just one of several similar mafia-like Bitcoin hits.
If You Invest in or Own Cryptocurrency - Don’t Tell Anyone
Given the rising number of cryptocurrency related thefts, kidnappings, blackmail attempts, and murders, it is becoming imperative for anyone who owns cryptocurrency to keep a low profile.
As disturbing as it might sound, in the majority of cases where people have been kidnapped or coerced into transferring cryptocurrency to violent attackers, victims have known their assailants. As a basic rule, anyone who has invested in cryptocurrency should, therefore, keep silent regarding the matter on social media. This and keep any kind of public boasting to an absolute minimum.
The Importance of Hardware Wallets & Dummy Cryptocurrency Wallets
Do you have Bitcoin held in cold storage on a third party exchange? Alternatively, do you own a significant amount of cryptocurrency which you store using a mobile app or hardware wallet?
As a rule, the safest way to store cryptocurrency in 2018, is via a dedicated hardware or paper wallet. However, what particularly security conscious cryptocurrency users might also want to consider, is creating a dummy wallet. This being a Bitcoin (or similar) wallet which stores a mere fraction of a person's true cryptocurrency wealth, which they can present to organized criminals in the event of a physical altercation or attempt at blackmail.