Insurance companies race to cover crypto kidnap and ransom risks

A wave of violent attacks on cryptocurrency holders is pushing insurers to develop new protections aimed at a growing physical threat: kidnapping for crypto.

At least three firms specializing in crypto insurance and security are now preparing tailored kidnap and ransom (K&R) policies for digital asset investors, according to a recent report from NBC News.

Rebecca Rubenfeld, chief operating officer of AnchorWatch, said fear of violence was a dominant topic at this week’s Bitcoin Conference in Las Vegas. “They’re tense,” Rubenfeld said. Her firm expects to launch K&R coverage by fall.

Physical attacks on crypto holders are not new, with cases documented for over a decade. But recent incidents, including the prolonged torture of an Italian tourist in Manhattan and kidnappings of crypto executives in France, have intensified concerns.

The decentralized nature of cryptocurrencies makes crypto executives attractive targets. Accounts are controlled by individuals, transactions are irreversible, and assets can be laundered if criminals extract access credentials.

Related: Crypto investor loses $2.6M in stablecoins in double phishing scam

Crypto wealth adopts K&R insurance

Crypto wealth is turning to traditional K&R insurance, which is common for corporate executives. Andrew Kurt, vice president of executive risk at Hylant Capital, noted that K&R has historically been highly profitable for insurers due to its low claim frequency but high severity.

“I think what has occurred is probably not going to be a large frequency issue, but more of a severity issue here and there,” Kurt said.

Relm Insurance CEO Joseph Ziolkowski said his firm is finalizing its K&R offering, but pricing is complex, requiring detailed assessments of a client’s physical and cyber defenses.

“If someone has 24/7 personal security detail traveling with them at all times, that obviously would be a credit and would affect premium,” he said.

Related: French minister to meet crypto firms after kidnapping attempt

Surge in crypto crime

On May 27, South Korean authorities revealed that they arrested one Russian national accused of an attempted robbery during a fake crypto deal in Seoul. The suspect allegedly lured Korean investors to a hotel, where they tried to steal 1 billion won (approximately $730,000) in cash.

The incident came amid a recent uptick in crypto-related violent crimes, including kidnapping and ransom cases.

On May 13, the family of Pierre Noizat, the co-founder and CEO of French crypto exchange Paymium, was targeted in an attempted kidnapping.

In response, executives and investors in the crypto industry are increasingly seeking personal security services. On May 18, private firm Infinite Risks International reported a rise in requests for bodyguards and protection contracts from high-profile figures in the crypto space.

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