On December 26th, 2017, Pavel Lerner, the CEO of cryptocurrency exchange Exmo Finance, was kidnapped outside of his office in Kiev, Ukraine. He was taken and thrown into a car while leaving work. Reports say that he agreed to a $1 million bitcoin ransom and was freed shortly after. This event has been heavily discussed within the crypto community. This is mostly because it gives a lot of lessons about security and privacy, and how they are essential in the world of cryptocurrencies. As bitcoin and other cryptocurrencies become increasingly popular and rise in value, risks of theft and attacks are growing. Three different types of people are concerned when it comes to security and protection of assets.
The example: Satoshi Nakamoto
Bitcoin was created in October 2008, when an anonymous person or group by the name “Satoshi Nakamoto” released a whitepaper about the peer-to-peer network and decentralized currency. Even after years of guessing, searching and interrogating individuals, nobody knows who is behind bitcoin. The mystery remains around this fabricated persona. It is reported that Satoshi owns one million bitcoin which is now worth approximately twenty billion dollars. Therefore, it is understandable why the founder kept a secret identity since the beginning. This was an extremely smart decision and now reveals to be warranted, following the story of Pavel Lerner.
The project leaders: Charlie Lee and Vitalik Buterin
Charlie Lee, the creator of Litecoin, is very active on social media and openly discusses Litecoin and other projects with the community. While this gives him a positive image, it also raises the question of privacy and secrecy. It can reveal to be dangerous to be so open, especially as the creator of one of the most popular coins. Recently, Charlie Lee announced that he sold all of his Litecoins, but claimed he was still working on the project itself. This could be due to security concerns and pressure he might have received from external parties. Vitalik Buterin, the Ethereum founder, might feel the same way. Being so famous and known to the general public, Vitalik runs even a higher risk of being threatened or attacked, like Pavel Lerner. These two actors of the cryptocurrency space have security guards, and their assets are extremely secure and well protected. The Winklevoss twins also highly protect their bitcoins, as mentioned in our previous article.
On the individual level
The unfortunate story of Pavel Lerner is a good reminder that it is extremely important to be private about owned assets and to hold private keys securely. It is important to keep digital currencies out of exchanges, where one does not have private keys, and in wallets, where one does. Andreas Antonopoulos, a bitcoin advocate and expert, says “Your keys, your bitcoin, not your keys, not your bitcoin”. Holding the private keys means the person truly owns the currency. If the individual does not have the private keys, then he or she is not the direct owner of the asset. That is why extreme security and privacy are important as the world moves towards adopting cryptocurrency as a means of payment and storage of value.
TLDR: Pavel Lerner, CEO of Exmo Finance, a cryptocurrency exchange was kidnapped and later released after he paid a $1 million bitcoin ransom. This story shows that privacy and protection are really important in this space. Satoshi Nakamoto is the example to follow, as his identity and privacy are still intact.