How does a game theoretic protocol stop someone extorting your friends into paying a ransom for your life? They weren't trying to get into his wallets, but getting his rich friends and relations to pay.
The cryptocurrency proposition is that that solution can be improved upon without implicitly trusting the state. I don't have that solution myself, but I'm not convinced that it can't exist. We'll know they've found it when these things stop happening, and it starts feeling like the riskier thing is to keep your money in a bank. Or maybe what they come up with doesn't feel like money at all, who knows.
When I try to imagine such a protocol, it involves a web of trust and crowd-sourced metadata such that people can refuse to accept coins which don't also come with proof that they're involved in activity that those people consent to. (A deficiency of dollars being that when I accept one I have no idea whether the loan that created it is for a venture that helps me or harms me, or whether the previous owner got it as a kidnapping ransom).
In such a scenario, the ransomed coins become useless without a backstory that identifies them to the recipient as non-harmful. If that backstory becomes prohibitively difficult to fabricate, then perhaps the crime doesn't happen.