Sam Altman, the chap who currently runs OpenAI, has been in the news by proxy this week, with his former boyfriend being attacked and tortured at his home to extract his keys to his crypto accounts, stealing over $10m worth of crypto. This was a coordinated and planned attack, which raises the question of whether self-custody is truly safer or if institutional custody, the division it creates between owner and would-be thieves and the security offered through institutional safeguards, outweighs the historic pitfalls that have led many to choose self-custody.
The debate is a long-fought one, but these instances bring to light the real dangers of walking around with a couple of million in your pocket: encrypted and safe, with only you having the key, but compromising your safety in being the only one who has the key. Self-custody absent physical protection could land you in a precarious position and put your capital at risk. I am reminded of a conversation relayed to me by an asset manager: a South African gentleman, former army, with a net worth north of £500m, whose daughter lived in Jersey and was a director on one of his companies. His concern was that if her identity was made public, people would kidnap her and hold her for ransom, which underscores that staying safe in a world of criminality is king. But kidnapping and ransoming someone is a lot more difficult than the swift extraction of keys by holding them hostage, as we saw with Sam’s former boyfriend.
For example, someone being kidnapped to extract money immediately triggers a manhunt, whilst the self-custody example triggers no such event until after the crime has been committed.
So perhaps the lesson is one of privacy, but it’s clear to see that when it comes to organised criminal networks, a custodian as a buffer keeps you safer and potentially your crypto safer too!