Scammers are using cryptocurrency ATMs across the US to steal savings from victims, often elderly individuals, by tricking them into depositing cash under false pretenses. In the first six months of 2024, Americans lost around $240 million to these scams, double the pace from the previous year, according to the FBI. Companies operating the machines profit from high fees and markups while facing criticism for inadequate fraud prevention.
The scams typically begin with fraudsters posing as law enforcement or tech support, convincing victims they face arrest or account hacks unless they pay immediately. Victims are directed to crypto ATMs, where they insert cash that is converted to cryptocurrency and sent to scammers' wallets. A single machine in a Prescott, Arizona convenience store became a hotspot: in four days this summer, Jeanne lost $18,000, Patricia $3,000, Heather $25,000, and Lily nearly $8,000, contributing to over $118,000 stolen there since last year.
Crypto ATM operators like Bitcoin Depot, CoinFlip, and Athena Bitcoin manage more than 16,000 machines nationwide, charging 20% to 30% markups on cryptocurrency. For instance, a Bitcoin Depot receipt from March 2023 showed a 24% markup on a $4,300 transaction, netting the company about $850 plus a $3 fee. Former employees told CNN that companies view fraud as not their problem, with one saying, “it’s not my problem if someone is stupid and gets scammed,” and another noting, “If there was a way to prevent 100% of scams there is no way this industry would survive.”
Law enforcement struggles to recover funds, as cryptocurrency transfers often go overseas. In Iowa, 69-year-old Shelby “Gus” Cason lost $15,000 after a scammer threatened arrest; despite police seizing the cash, Bitcoin Depot won in court, arguing Cason agreed to terms of service. Iowa’s attorney general sued Bitcoin Depot, alleging over half of its transactions—more than $7 million—came from scams over three years. Maine denied Bitcoin Depot a license, finding elderly consumers accounted for over 70% of funds and lacking safeguards. The District of Columbia sued Athena Bitcoin, claiming 93% of deposits were fraudulent.
Companies defend their practices, stating scams represent a small share of transactions and users acknowledge warnings. Bitcoin Depot said it has refunded millions in fees but reviews cases individually. Regulators and police urge stricter limits, but industry lobbying has softened laws in states like Minnesota, raising daily caps from $1,000 to $2,000 for new users. Federal Trade Commission data shows losses surged from $12 million in 2020 to $114 million in 2023.