Can Panic Wallets Prevent Physical Attacks? The Security Debate Surrounding Crypto

On December 1 in Val-d’Oise, France, the father of a Dubai-based crypto entrepreneur was kidnapped off the street, marking yet another incident in Jameson Lopp’s archive of verified physical assaults against digital asset holders. Lopp’s database shows a staggering 169% rise in reported physical attacks on crypto holders in 2025.

The growing number of physical attacks is not limited to the crypto space; gold brokers and cash couriers have faced violence over the years. However, the alarming trend is that these thefts are increasingly conducted in person rather than through online means.

This shift toward physical assaults has sparked a race for newer wallet designs. The so-called “panic wallets” offer duress triggers that can erase balances or send out false decoy messages at the slightest hint of danger.

However, as Lopp remarks, the effectiveness of such wallets heavily depends on the unknown intentions of the attacker:

“Ultimately, use of duress wallets relies upon speculation about the attacker, and you can’t possibly know their motivations and knowledge.”

The Data Behind the Fear

Lopp’s findings reveal that attacks often align with market trends—escalating during bullish periods when major transactions are privately executed. While the US has the highest total number of incidents, the per capita risk seems inflated in places like the UAE and Iceland.

About a quarter of these incidents involve home invasions, frequently aided by publicly available personal information. Lopp’s research indicates that around 23% of the attacks are kidnappings, and two-thirds are successful, with 60% of known attackers getting apprehended.

The surge in physical attacks correlates with fluctuations in Bitcoin’s price, as each market surge brings new investors and new targets for criminals.

Testing the Panic Gesture

Despite the evolution of digital self-defense, there remains an absence of solid data on the efficacy of these panic wallets. Lopp shares anecdotes of individuals who tried using decoy wallets but failed to outsmart their captors.

The Builders Fighting Back

Matthew Jones, founder of Haven, speaks from experience. After a failed transaction in Amsterdam led his counterpart to flee, he never caught the gang responsible but used those insights to create a multi-party custody wallet that requires continuous authentication without revealing identity.

Large transactions need real-time confirmations from trusted contacts, making impromptu coercion less viable. Jones emphasizes weighing the risks before deciding on the amount one holds in their wallet.

The Custody Dilemma

As more physical threats arise and privacy regulations tighten, even experienced Bitcoiners are reassessing self-custody, with some preferring custodianship over personal risks.

Lopp considers this shift disastrous, as it could lead to significant centralization in the crypto ecosystem, increasing systemic risks:

“If enough people decide that Bitcoin self-custody is too dangerous to undertake, this will create massive centralization and systemic risk to the entire system.”

Ultimately, every measure taken to enhance security can inadvertently compromise anonymity, thereby widening vulnerabilities to attacks.

What Actually Works

In spite of the technological advancements, Lopp insists that the best line of defense remains social discretion:

“The most effective thing that a Bitcoiner can do to reduce their wrench attack risk is very difficult: Don’t talk about Bitcoin, at least not while using your real name or face.”

With the rise of hardware wallets with panic features and more stringent regulations, perhaps the most scalable defense against such attacks will be cultural change. Most attacks succeed because victims are easily identifiable, not because their wallets are vulnerable.