Hot Topics: The Dark Side of Digital Wealth: Protecting Yourself in the Crypto World

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In this gripping episode of The Edge of Show, hosts Richard Carthon and January Jones sit down with Christian Davies from Realm Insurance to dive deep into the dark side of crypto — the rising wave of crypto kidnappings, ransom extortion, and massive hacks. From shocking real-life kidnapping cases to high-profile exchange breaches, this episode explores how crypto executives and investors can protect themselves, their assets, and their families. Christian shares crucial insights into risk management, kidnap and ransom insurance, and how the crypto community rallies to recover stolen funds. Whether you're a crypto founder or investor, these practical strategies will help you stay safe in an increasingly volatile landscape.

Key Topics Covered:

• Rise of Crypto Kidnappings Worldwide:
  How incidents like the Italian investor case and kidnappings in France highlight the growing physical threats to crypto executives and their families.
  
  
• Crypto’s Traceability and Law Enforcement Role:
  Why crypto isn’t as untraceable as criminals believe, and how global authorities like the FBI and UK’s NCA track stolen funds.
  
  
• Bybit Hack Recovery Success:
  How Bybit bounced back after a $1.5 billion hack through community collaboration, transparency, and quick action.
  
  
• Role of Insurance in Crypto Security:
  Insights from Realm Insurance on how crime insurance and kidnap & ransom policies protect against digital and physical threats.
  
  
• Practical Safety Tips for Executives:
  Behavioral changes and IT security practices every crypto executive must follow to minimize risk.
  
  

Episode Highlights:

1. "Physical harm is now a real risk in crypto. Once you publicize your holdings, you become a target." – Richard Carthon
   
   
2. "Crypto is incredibly traceable. Criminals think it’s untraceable, but it’s one of the most visible assets in the world." – Christian Davies
   
   
3. "Bybit’s recovery was a success story of transparency and collaboration across the crypto ecosystem." – Christian Davies
   
   
4. "Don’t keep millions in crypto on your mobile phone. Common sense security saves lives." – Christian Davies
   
   
5. "The more proactive you are, the better you can protect your family and assets." – Richard Carthon
   
   

People and Resources Mentioned:

• Richard Carthon
  
  
• January Jones
  
  
• Christian Davies (Exact profile TBD)
  
  
• Realm Insurance
  
  
• Bybit
  
  
• Cointelegraph
  
  
• Binance
  
  
• Merkle Science
  
  
• Elliptic
  
  
• FBI
  
  
• NCA UK
  
  

About Our Guest:

Christian Davies is a leading expert in crypto risk management and digital asset insurance. At Realm Insurance, he develops cutting-edge insurance solutions for industries like Web3, AI, biotech, and alternative medicine. With years of experience in kidnap and ransom (K&R) insurance, Christian works with crypto executives and companies to mitigate both digital and physical threats, offering comprehensive coverage and specialized risk strategies.

Guest Contact Information:

• LinkedIn: Christian Davies (Exact profile TBD)
  
  
• Website: Realm Insurance
  
  
• Twitter/X: @RealmInsurance
  
  

Transcript:

Richard Carthon: Welcome to Hot Topics on the Edge of Show. I'm Richard Carthon. I'm here with my co-host, January Jones, as well as Christian Davies from Realm. Thanks again for joining us, Christian.

Christian Davies: Always. Thanks for having me.

January Jones: This is another production of Edge of Company, a rapidly growing media ecosystem empowering the pioneers of Web3 technology, culture, and innovation. Today, we are talking about the darker side of crypto news, kidnappings, ransom extortion, and massive hacks. We'll candidly discuss trends and some ways to stay safe.

Richard Carthon: This episode is brought to you by Realm. Realm crafts insurance solutions that give businesses and dynamic industries like Web3, AI, alternative medicine, biotech, and space and economy, the protection to innovate and thrive. Where emerging industries have previously battled uncertainty, Realm is making innovation resilient. And a quick note, the views expressed by the Edge of Company did not necessarily reflect those of Realm. All right, let's get started.

January Jones: Okay, well, this year, 2025, crypto headlines have been dominated not just by soaring values and changing laws in the United States, but also by a disturbing rise in crypto kidnappings, ransom extortion, and massive hacks. Back in May, two men were charged with kidnapping and torturing an Italian cryptocurrency investor in New York. As ABC7 reported, over 17 days, they allegedly subjected the victim to brutal abuse to force him to reveal his Bitcoin wallet password. He managed and escaped and alerted police and the suspects were arrested. They were initially denied bail, but in August, they were granted $1 million bail each with restrictions like electronic monitoring and home confinement, despite strong objections from prosecutors citing their means to free and obviously the violent history of the accusations of the kidnapping.

Richard Carthon: Yeah, this is wild that we've entered the territory of physical harm that's coming to people that own cryptocurrencies. I think in a lot of ways, old crypto, whether it's on Twitter, XR, Telegram, et cetera, and people talk about their bags. When you make your stuff public and let people know what you potentially have, you then are becoming a target. And then people are seeing that, which is just, you know, scary. But the other side of it, too, because a lot of the things on a wallet can't be undone, like once it's sent, that's that. So in a lot of ways, like let's say that someone does force you in the world of crypto to send to an address. Unlike, you know, if someone steals your credit card and, you know, you try to reverse something like can't reverse it. And so it's it's it's undoing like it's it's it's a challenge it's something that people have to start preparing for, especially those who are starting to accumulate pretty massive wealth in the world of crypto. And people are definitely taking notice. Like I was at Bitcoin Las Vegas earlier this year, and I definitely noticed more people with security, like more than I've seen previously. But this isn't just a problem in the States. This is an international problem. And I think that kind of brings us to the second article that we're going to talk about.

January Jones: Yeah, it is an international problem and some places that have had big companies with crypto and a larger crypto adoption like France have seen these incidents happening as well.

Christian Davies: Yeah, you know, I kind of jump in on this one. It's kind of fascinating when you see the old school kidnapping of very historically done in places in South America, in Brazil, obviously, like one of the kidnapping countries of the world and how it's kind of pivoted to starting to attack crypto executives, crypto executives, families, And like you said, Richard, there is that weird kind of accessibility with crypto where some are super public because of social media, and some are under this meme name that actually people might not even know who the real person is. The violence of it has also become quite fascinating. Again, you wouldn't have traditionally seen a huge amount of kidnapping for money or assets in France. And it's not something you traditionally hear a lot of it in the US. But lo and behold, people seem to think that crypto is incredibly movable, incredibly liquid, and not very traceable. Yeah, it's massively liquid. However, what people forget is, The crypto industry is an incredibly tight knit industry. Once these things start to happen, everyone kind of bands together to try and help out. And crypto is incredibly traceable, like so traceable, people forget about that. Yes, you have mixes, you have some of these privacy coins, but there are companies out there, Merkle Science, Elliptic, amongst several others that have built entire business models on tracking and tracing crypto and trying to recover it. the FBI have whole teams now that just do and track crypto. The NCA, the National Crime Organization, the NCO in the UK, have a whole crypto team as well to track and trace this stuff. So yeah, you know, it's great. We're going to kidnap someone, cut their fingers off, torture them. We're going to take possibly one of the most visible assets in the world, because as soon as it goes onto an exchange, everyone can see it. You've then got all these different institutions following this money. And even with these mixes, some of the technology that they've created are pretty good at actually guessing where that's coming out, because it might be an already used wallet from some other incident or something. So, you know, people might think it's really easy, low hanging fruit, you create a huge amount of emotional distress and potential physical damage to these people, but you might very well end up with no real reward from it. As we've seen, they caught the two people in the US, they caught the people in France, they've caught most of the people in a lot of the other different jurisdictions as well. But it's frightening, right? Who thinks that they might get kidnapped? We've seen a massive rise in personal security, close protection in the last year with crypto executives. You go to any kind of big crypto event now, most senior executives have some kind of security around at a lunch, at a breakfast, to the conference, in the conference, which is both sad. And, you know, I was also surprised that it wasn't happening earlier. You would see some guys walking around in the early days with massive amounts of security. And I think I was just maybe a little bit of a flex at the time because no one really knew who it was. But now I think it's really cool.

January Jones: Yeah. Who's that guy that comes through parties in the gold mask with all his people in uniform?

Christian Davies: I've seen him. I can't remember who he is yet.

January Jones: We don't know who he is and that's the point. But, you know, I will kind of take this back to Flex, since you said it, is that Before, though, people wanted to flex. They had crypto, right? It was almost they had to promote the industry or show, look what I did, you know. And we've seen that shift now that the money, I guess, has gotten more real and that other people understand it. But I mean, from when I've came in, I'm a little late to the game here in the crypto culture. But, you know, people wear Bitcoin necklaces. They have the medallions and they're kind of promoting that this is what they believe in. Right. And that means that we're seeing kind of a shift now. People, you know, aren't showing up. And they're going to keep their mouths quiet.

Christian Davies: You know, you'd be relatively miffed if you're the guy who gets kidnapped or, you know, mugged and actually your Rolex is fake. And, you know, it's like how many of these people are kind of rocking around that, you know, they might ultimately believe in what decentralization is doing and the value of Bitcoin as, you know, as we all do. I've been in crypto for ages and ages and ages. Don't have any long-term bag holdings or anything for any potential kidnappers that are watching this. But, you know, it's like, Some of them have money and some of them don't. Some of them just believe in the ecosystem. But there were lots of things that we've seen as an insurance company. We specialize in risk management and. we've seen that traditionally, kidnap and ransom insurance policies that do exist, what will be traditionally for like oil and gas executives going to weird and wonderful countries around the world, where they might potentially get kidnapped, because the expectation is they have these kidnap and ransom policies and that will then pay on their behalf, not because they have a huge amount of money. And with crypto execs, it's a little bit different. because some of them do have a large amount of money in crypto holdings. So, you know, K&R insurance companies have been very, very slow to bring or even want to offer it to what they deem is very high risk. And that's why, you know, companies like Realm, you know, we're developing our own insurance products to better service our clients and help indemnify them this and, and, you know, it's not just an insurance product as well. The services that revolve around kidnap and ransom insurance are pretty intense. You have like 24-hour, seven-day-a-week, 365-day security operation centers that are attached to these products. They're monitoring kidnap rates, ransom rates. They're taking 24-7 calls from potential victims of kidnap or ransom from all over the world. It's very heavily run by ex-services people, ex-military. You know, sometimes these guys have to go into places that they don't want to and are pretty dodgy. And you've got some heavily armed military people making cash drop-offs in different locations on their behalf. It is a real thing. It is very much from movies, which means, you know, when you're messing around with people's safety, you do not do this stuff lightly. So there are, you know, a very select group of people that have these resources. And that's what we're kind of developing out for our, you know, insureds in the future at the moment.

Richard Carthon: Well, it's good that you're showing these things in place. I mean, just what we've seen this year has been pretty well, but also just over the last three years, just for some stats, like about $128 million have happened just from kidnappings alone. When you look at two big profile cases that happened this year, including a Ledger co-founder getting captured and having his finger severed, and then The taller from the grandson from pay BM CEO also recently happened just back in May. So because of the increase, this is something that has to be top of mind, especially for a lot of crypto executives. So even for different people, and they think about how to protect themselves and their family. This is something to keep in mind. But I mean, obviously, this is the physical side, but hacking has been happening for years. And so that kind of brings us into our next article of kind of just going into the there's there's physically being robbed and then there is digitally being robbed. So let's talk a little bit about that.

January Jones: Yeah, well, we're talking about actually a comeback story, a story that has a relatively happy ending. As reported by Cointelegraph and other outlets, Bybit, the world's second largest crypto exchange behind Binance, was rocked by a $1.5 billion hack back in February of this year. But just 30 days later, they recovered all their Bitcoin liquidity levels. So usually it's you don't get it back. So what happened that was different with 5-bit that they were able to make such a rapid recovery?

Richard Carthon: Oh, there are a few things that happened here. And yes, this is news that happened previously, but I think it's relevant to like what's happening. As you think through worst case scenarios, there are a lot of projects that either have been around for a while or are getting ready to launch and I think this is continuing to be top of mind, because you always security should be the most top of mind for what you're building and working on. So yeah, $1.5 billion got lost from a compromised device from a safe wallet developer. And ByPit responded very quickly and was being very transparent. Ben Zhao came on and assured the community that they were going to get everything good to go. And as they kind of worked or everything, they figured out like how to work with some of their partners from other exchanges, like stepping in, getting some bridge loans from some different decks as well, tech support, and even like helping figure out like how they could freeze certain stolen assets so that they wouldn't go around. So there are more things being put in place to try to help deter these types of things from happening. But it's always still a chance. And let's say that you're not able to recover, that's when you need something to help with that. And I think, Christian, this is probably something you can speak more to.

Christian Davies: Yeah, I mean, totally. It kind of reiterates what I was saying around the crypto industry and the economy of crypto. The fact that everyone stepped in to help Bybit, that happens a lot. People forget that In traditional competition, you wouldn't exactly have the CEO of JP Morgan having a regular catch up with the CEO of Morgan Stanley and Goldman Sachs. In crypto, that's very different. The CEOs and founders of a lot of these companies, even though they might be competing against each other, they catch up frequently. They might be friends even. and it's not just like it's not it's this friendly kind of competition that then everyone jumps in to help each other when these things happen and that's what's so fascinating and even like other people from all over the space offer their time and their service for free and it's great this was a massive success story it was you know Bybit have huge amount of reserves and collateral and it's a very well-run company and and these things happen and their insurance exists to help protect for these things. So we've created, you know, for six years, we've offered crime insurance, it's a digital asset, crime insurance, and that covers the theft and loss of digital assets, you know, simple, right in the care, custody and control, or care, custody or control of yourself. And, you know, the crime covers hot wallet risk, for all intents and purposes, the specie market, covers the cold wallet risk. I don't necessarily believe in this kind of mid-warm. Me personally, I don't believe in this mid-warm, you know, warm storage because it's either off or it's on the internet. Off the internet or on the internet. And that's kind of like the way we look at it, but we work very closely with clients who are all very interested in, you know, purchasing limits of insurance, you know, in the multiple millions, tens of millions to hundreds of billions to get cover for their digital assets. And that's exactly what we're doing. I've listened to our clients and Huge, huge success with that. We have had losses and we've paid out losses. And, you know, it really works.

January Jones: Well, let's circle back a minute because we're talking about kind of the pitfalls and the bad things that have happened. Right. But I mean, Christian, from your perspective with insurance, it's not just like doing the paperwork. Right. It's also changing human behavior. Right. And we were talking about this with the kidnapping ransom insurance. Do you have 24 hour security? Like, what are the checking these boxes? So I mean, maybe we're going to have so many crypto millionaires, everyone's going to be vulnerable, but we do get these hacks. We saw the hack with Coinbase, right? And people's addresses and how much they're holding got released. I don't think we've seen the fallout from that yet, but it takes time, right? We may. And so there are these vulnerabilities. and any financial system now within the crypto system. People like to say it's transparent and we can find it, but can't always get it back even if you can find it, right? And so maybe we can transition into like what are those behaviors and how do you change human behavior to make sure that you're staying safe in the face of, one, the kidnapping and ransom issues, and then also from these kind of hacks. And I think I'm asking too many questions right now, but I think my thing with the hack is this piece of it is like what, Bybit did is they got ahead of it, right? And so then how does comms feed into, you know, that bit of protecting yourself when these things happen? Because communications for a company that also goes to that question of trying to change human behavior to protect yourself.

Christian Davies: They did such an amazing job on their comms as well. They like immediately came out and told everyone, CEO, CEO founder, we're like, this is what's happened. We're investigating. And you know, it's like hourly updates. And, and again, like this is, this is the thing, like these crypto companies, they're private companies. They're not government backed. It's not like a bank that all of a sudden can't do anything and then a government has to step in and eventually give communication 10 days down the line. This is real time. We have social media. Crypto is a social media ecosystem as well. Everyone knows and everyone talks and everyone tries to help. So communication is key because if you mess around with the individuals like us, the users, It's an absolute client service industry like we want to know these things I think they did an amazing job of communication and we've seen how. communication can really help or hinder the lack of communication. And for us, in terms of risk management, we're always looking at what's their disaster recovery plans, what's their business interruption plans. These are things that we actively ask them when we're assessing risk. But you'll be amazed, so much of this is common sense, right? Most of these problems that happen.

January Jones: It is, but you know, there's one part of it where it's like, don't say anything, right? And maybe no one will notice, but crypto is so social, right? So I think the expectation that people have in this industry that's different, you know, instead of keeping a lid on it, although Coinbase kept a lid on that for a minute, their hack, they want to tell people what's going on because someone's going to find out.

Christian Davies: Yeah. I think that when people, Coinbase, what was interesting about Bybit is it was real-time. However, the actual root of the cause of it wasn't until a lot later because they obviously have to figure out what it was. That's very much the same as Coinbase. It was like, we need to find out because There's a difference as well under a variety of laws in lots of different jurisdictions. Your crypto being hacked doesn't necessarily form any regulatory. It doesn't necessarily have any regulatory implications.

January Jones: Oh yeah, so it's not enforceable.

Christian Davies: Yeah, so unlike some things with Coinbase, when you look at it was a data breach that led to potential, there are regulations around data. So PII, which is personally identified information or personal health information. California has its own law around that, the UK has its own law around that, GDPR, and every state in the US and everywhere else around the world have their own. And that, you have to get law enforcement involved, you have to tell the regulators, you have to tell government in some jurisdictions, they might tell you, you can't make it public. So there is that to take into consideration, because there were two different types of hacks. One was a data breach. One was theft of digital assets. And most of these guys play it kind of really by the book. But yeah, Bybit did a great job. That was incredibly transparent.

January Jones: Yeah, well, let's revisit then a little bit of the K&R. You've said you guys are developing policies and I was talking about changing behaviors, right? And so maybe we could just talk for a minute, give some hot tips on how to stay safe and some of those behaviors that you see that you would recommend to stay safe against some of these more, you know, random, what seems like random risks of kidnapping and ransom happening in the crypto community.

Christian Davies: Yeah, I think that, you know, the There is always this thing about being public, right? And some people just can't avoid being public because it's in the nature of what they've done and what they've founded and the brands that they have built. So then there's a variety of different risk management techniques you could use. There is personal security, there is IT security, right? There is good understanding of how crypto works and the actual access to it. people are setting up their, you know, law firm setting up with different infrastructure, like trusts and wills on the back and the basis of this and who can access it and how it's going to be, how it can be accessed. There's also a load of third party security providers who specialize in crypto recovery, you know, seed key recovery. There's tens of hundreds of different ways of doing it. And I think some of them suit some people, some of them don't. What I would always advocate is don't just be the person that has all of their crypto really easily and readily accessible on their mobile phone, wherever they are at any one time, depending on what your holdings are, right? There should be a small amount of money that you actually need. But if you're in the millions, probably don't need to access it on your phone all the time. You should probably have a good system and setup, maybe in a safe, maybe with different third parties. It's not much point to have it on your phone. And the more redundancies you have on this, the better. Are you the sole signatory on your own stuff? Maybe not. When you look at private banking, they don't always have access to all of the money that they can have single-handedly at any one time. Who needs to rock around with $20 million of crypto on their phone? Not many people. Again, this is where I kind of go back to common sense. Yeah. Yeah, that's probably the best thing.

Richard Carthon: I think it's really important. And, you know, I think it's been really good to get a lot of like insight from you around things that you don't always have to think about. But when it comes, you have to act very quickly. And the more proactive that you can be, the better. And also, obviously, more common sense of thinking through scenarios and having things in place so that you can move fast if worst case scenario happens is important. But for someone who's listening to this and they're like, You know, I need to do something about this or I need to like get proactive about it. What are ways that people can go learn more about this with Realm?

Christian Davies: So, you know, the good thing around talking about common sense is you can have common sense, but unfortunately stuff happens. And that's exactly what insurance is for, right? It's when that kind of, oh crap moment happens that I've, I did everything, but something bad still happened to me. And that's when insurance steps in. So you can do as much risk management as you want, but something can ultimately still end up by happening. Is that struck by lightning situation. So, You know, with Realm, especially around the Kinect and Ransom side, we'll have a lot of information coming out shortly around the risks associated with it, the best practices, how to help or hinder yourself, what you should and shouldn't do, and then a lot of information around the products that we're going to be launching. Um, and I think that there are a huge amount of, um, spokespeople out there as well. Have a good Google around personal security, um, and, uh, and crypto, and you'll come up with some great, some great, um, fact finding. We'll be doing some ongoing blogs around kidnap and ransom and risks associated with crypto, crypto executives in the future when we launch our new product.

January Jones: Well, may everybody be blessed with so much crypto that they have to worry about this, right? This is the new economy and so. It's nice to discuss these things in context and not to fear monger, right? But it's common sense, you know, like I have a son and he had a wallet where you show all the cash on the outside. It's like a clip. And I'm like, what are you doing? Are you crazy? You don't flash cash. It's the same kind of thing, right? When it comes to crypto, what are you flashing and why? And use your common sense, like what would your mom think? Well, that wraps up today's episode of Hot Topics. We covered some rising crypto crime and ways to stay safe. Find us on socials and join the ongoing conversation about blockchain, crypto culture, and innovation.

Richard Carthon: I'm Richard. I'm here with January and our guest Christian Davies from Realm. Stay curious, keep pushing boundaries, and don't forget to subscribe so you never miss what's next on the Edge of show.

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