Are you talking about the counterparty taking 'physical' people hostage and torturing them? Because that sort of runs counter to 'everyone is invulnerable and immortal'.

Or about them running sentient hell-simulations for fun because they're a sadist? In which case, yes, that is a concern. If you knew it was going on, you could presumably try countermeasures (up to and including threatening to run simulations that decrease the sadist's utility function, if you know it). Otherwise, maybe engage in trades with other people where you refuse to cooperate with someone unless you both audit each other's hardware?