Recently, a kidnapping in Brazil resulted in a multi-million dollar payment in bitcoin for the criminals.
The case happened over 2 years ago, in September 2020. At the time, the victim – a German entrepreneur who chose not to disclose his identity – was seized by a pair of criminals in front of his home in Goiás, a midwestern Brazilian State.
Security camera footage shows two criminals approaching the entrepreneur as he arrived at his home. Following that, the two kidnappers forced the business owner to enter codes in order to access his cold wallet on a computer. The victim was held at gunpoint and heard that he would be executed if he didn’t comply with the criminal’s demands.
Choosing the safest option, the bitcoin investor transferred a whopping amount of 555 BTC to the criminal’s wallet, totaling nearly $10 million dollars.
The police eventually got to one of the suspects because of public knowledge about the destination of Bitcoin transfers.
The suspect, Edgar Acioli Amador, happened to be arrested in the same year of the incident, but for a different crime.
According to Globo, Edgar is also accused of partaking in the murder of another entrepreneur after, regarding a crypto Ponzi scheme named “Valourinveste”.
The Down Side of Keeping Crypto In Hot/Cold Wallets
Following the collapse of the cryptocurrency exchange FTX, many investors decided to remove their assets from exchanges, in order to not be at the mercy of potentially fraudulent companies.
In theory, that is the safer route. After all, an investor holding crypto in a cold wallet is the only person responsible for the safety of the assets.
However, that does open up other potentially harmful possibilities.
A cold wallet holder is more prone to bricking the wallet (i.e. forgetting or losing the information necessary for accessing it). Also, investors who keep their money in “hot wallets” can be prone to digital crimes such as hacking.
On top of it, self-owned wallet investors are subject to potentially being on the foresight of criminals looking to steal millions of dollars in cryptocurrency. Just like it happened in Brazil.
In the end, no matter in what way investors chose to store their crypto, it will always be a double-edged sword.
For investors who are transitioning to cold-wallet storage, the best option is to never talk to anyone about how much value you hold.