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Fraud

Crypto ATMs: A New Frontier for Scammers

Strategic Insights

— 1 min read

Investigations by CNN and law enforcement agencies have uncovered widespread scams tied to cryptocurrency ATMs, with victims losing hundreds of millions of dollars in the first half of the year. These ATMs, found in corner stores and other locations across the US, have made it easier for scammers to quickly send large sums of money to places out of reach of US law enforcement. Scammers prey on the average person's lack of knowledge about crypto ATMs, exploiting their victims' trust and assuming they will deposit money into the machines to pay off fines, fees, or debts to companies or the government.

Key Takeaways:

  • At least a dozen potential fraud cases tied to a single crypto ATM have been documented by CNN, indicating that these cases are rampant in the US.
  • Scammers use a script to intimidate victims by phone and demand urgent payment, often referencing made-up fines, fees, or debts.
  • Many people, including doctors and CEOs, have fallen victim to these scams, highlighting how targeted and believable they can be.
  • The FBI has reported that Americans lost around $240 million to crypto ATM scams in the first half of the year.
  • Companies behind the crypto ATMs dispute allegations that they profit from scams, though some investigations have alleged that scams account for up to 90% of their business.
  • The scammers' identities often remain a mystery, but some have been charged, including a high-level member of a transnational fraud ring.
  • Scam compounds in countries like Myanmar have been linked to the targeting of Americans.
  • The process of manually reading through incident reports to identify recurring addresses for the same location or store took around four months and resulted in over 700 cases being logged.

Statistics:

  • $240 million: The estimated amount lost to crypto ATM scams by Americans in the first half of the year (according to the FBI).
  • 1%: The estimated percentage of cash-to-crypto transactions found to be illicit in 2023 by the analytics group TRM Labs.
  • 90%: The percentage of deposits in one company's ATMs allegedly from fraud over the span of months, according to the DC attorney general.

Sources:

  • CNN's investigation into crypto ATMs
  • The FBI's report on crypto ATM scams
  • The analytics group TRM Labs' report on illicit cash-to-crypto transactions
  • The DC attorney general's allegation of 90% of deposits coming from fraud
  • State laws and regulations aiming to blunt crypto ATM scams
  • CoinFlip's model legislation with fewer protections.

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