11 million encryption coins were robbed, and physical attacks are gradually becoming a mainstream threat.

Written by: Liam Akiba Wright

Compiled by: Saoirse, Foresight News

According to the San Francisco Chronicle, at around 6:45 AM on November 22, a suspect posing as a delivery person entered a residence near the intersection of 18th Street and Dolores Street in the “Dolores Mission District,” took control of the resident, and stole a mobile phone, a laptop, and approximately 11 million dollars worth of cryptocurrency.

As of Sunday, the San Francisco police have not announced the arrest of anyone, nor have they provided specific details about the assets involved in the robbery. They have not yet disclosed the blockchain network or token type associated with the cryptocurrency in question.

Physical attacks against cryptocurrency holders are not isolated incidents; a concerning trend is gradually emerging.

The cases we reported earlier include: a home invasion robbery in the UK involving an amount of 4.3 million USD; a kidnapping and torture case in New York's Soho district aimed at forcing the victim to hand over access to their Bitcoin wallet; a surge in kidnapping cases related to cryptocurrency in France and the government's response measures; extreme protective measures taken by well-known cryptocurrency holders (such as the “Bitcoin family”) to enhance operational security by distributing their wallet mnemonic phrases across multiple continents; a trend among high-net-worth cryptocurrency investors to generally hire security personnel; and an analysis of the trend of “ransom attacks” (referring to attacks that use violence to obtain cryptocurrency) and the pros and cons of self-custodied cryptocurrency.

On-chain tracking was immediately initiated after the robbery occurred.

Even if a robbery starts from a front door, the stolen funds often still flow on the public blockchain ledger, making tracking possible—thus forming a “race”: on one side is the shifting of money laundering channels, and on the other side are the increasingly mature and constantly improving freezing and tracking tools by 2025. Meanwhile, USDT on TRON remains a core consideration in this “race.”

This year, through the cooperation of token issuers, blockchain networks, and data analysis companies, the ability of the entire industry to freeze illegal assets has been enhanced. According to the report from the “T3 Financial Crimes Department”, since the end of 2024, hundreds of millions of dollars in illegal trading tokens have been frozen.

If the hijacked funds include stablecoins, the likelihood of preventing the flow of funds in the short term will significantly increase — because major stablecoin issuers will collaborate with law enforcement and data analysis partners to blacklist the involved wallet addresses upon notification.

Broader data also supports the view that “stablecoins are the preferred tool for illegal fund flows.” Chainalysis's 2025 crime report shows that in 2024, stablecoins accounted for approximately 63% of the total volume of illegal transactions, marking a significant shift compared to previous years when BTC and ETH dominated money laundering channels.

This transformation is crucial for fund recovery: because centralized stablecoin issuers can block transactions at the token level, and when intermediary funds enter the stage that requires KYC procedures, centralized platforms (such as exchanges) become additional “interception nodes.”

At the same time, Europol warns that organized crime groups are upgrading their methods of operation using artificial intelligence - this not only shortens the money laundering cycle but also enables the automation of fund splitting across blockchain networks and service platforms. If the target address of the illicit funds can be identified, the key to action lies in notifying the token issuer and exchanges as early as possible.

From a macro perspective, the victims' losses are still worsening.

The records from the Internet Crime Complaint Center (IC3) under the Federal Bureau of Investigation (FBI) show that losses from cybercrime and fraud reached $16.6 billion in 2024, with cases of cryptocurrency investment scams increasing by 66% year-on-year. Between 2024 and 2025, there has been increased attention on physical coercion incidents targeting cryptocurrency holders (sometimes referred to as “pig butchering scams”) — these cases often combine home invasions, SIM card hijacking (gaining control of someone else's SIM card through fraudulent means), and social engineering tactics. TRM Labs (a blockchain security company) has recorded related trends of such coercive theft.

Although the case in San Francisco only involves a single residence, the modus operandi is representative: infiltrating devices → forcing victims to transfer funds or export private keys → quickly dispersing funds on-chain → testing whether withdrawal channels are viable.

The new regulatory policy in California adds another variable to this case. The state's Digital Financial Assets Act will take effect in July 2025, granting the Department of Financial Protection and Innovation the authority to issue licenses and enforce regulations for specific cryptocurrency exchanges and custodial activities.

If any “exit channels” (referring to channels that exchange cryptocurrencies for fiat currency), over-the-counter (OTC) brokers, or storage service providers associated with California come into contact with this batch of stolen funds, the regulatory framework of the Digital Financial Assets Act can support their collaboration with law enforcement agencies. Although this is not a direct means of recovering self-custodied assets, it will impact the counterparties that thieves typically rely on to exchange cryptocurrencies for fiat currency.

Policy changes in other regions will also affect the subsequent direction of the case.

According to the legal analysis by VinAbel Law Firm, the U.S. Department of the Treasury removed the mixer Tornado Cash from the “Specially Designated Nationals List” (referring to the list of individuals or entities sanctioned by the U.S.) on March 21, 2025. This adjustment alters the compliance requirements when interacting with the codebase of this mixer.

However, this change has not legalized money laundering, nor has it reduced the analyzability of on-chain transactions.

However, it did weaken the “deterrent effect” that previously drove some participants to turn to other mixers or cross-chain bridges. If stolen funds are mixed using traditional mixers before withdrawal or transferred to stablecoins through cross-chain bridges, then the work of tracing the funds and the initial trigger of the KYC process will still be key points in the case.

Due to the fact that the wallet address involved has not been made public, the trading platform can plan response strategies for the next 14 to 90 days around three core paths. The table below lists the “Level 1 Fund Transfer Model”, key indicators to pay attention to, and the probability range for fund freezing and recovery based on the market structure and regulatory situation in 2025:

The timeline clues of the case can be inferred based on the above model.

In the initial 24-72 hours, focus should be on the consolidation and early transfer of funds. If the involved address is exposed and the funds include stablecoins, the issuer should be immediately notified to initiate a blacklist review; if the funds exist in the form of Bitcoin or Ethereum, it is necessary to monitor the movements of mixers and cross-chain bridges, as well as whether there is a conversion to USDT before cashing out to fiat currency.

According to the collaboration process of the “Internet Crime Complaint Center”, if the inflow of funds requires KYC execution, a “Asset Preservation Letter” will usually be issued within 7-14 days and the relevant accounts of the exchange will be frozen.

Within 30-90 days, if a privacy coin trading path emerges, the focus of the investigation will shift to off-chain clues, including device forensics, communication records, and traces related to “fake delivery” scams - the fund tracing work by TRM Labs and similar organizations will also gradually advance during this stage.

The wallet design continues to upgrade to address the risks of physical coercion.

In 2025, the application scope of “Multi-Party Computation Wallets” and “Account Abstraction Wallets” will further expand, adding features such as policy control, seedless recovery, daily transfer limits, and multi-factor approval processes—these designs can reduce the risk of “single point exposure” of private keys in physical coercion events (i.e., private keys will not be leaked through a single device or link).

The contract-level “time lock” (referring to the mechanism that sets delay in trade execution) and “spending limit” functions can slow down the transfer speed of high-value funds, and if an account is stolen, they can create a time window to issue a warning to the issuer or exchange.

These protective measures cannot replace the basic security standards regarding device usage and home safety, but they can reduce the likelihood of a thief successfully stealing funds when they come into contact with a mobile phone or laptop.

The report by the San Francisco Chronicle has provided the core facts of the case, but the San Francisco Police Department's official website has not yet released a special announcement regarding the case.

The subsequent progress of the case will depend on two major factors: first, whether the involved target address will be made public, and second, whether the stablecoin issuer or exchange has received requests for review and intervention.