Copyright Forbes
Brian Schwalb, Attorney General for the District of Columbia, recently filed a lawsuit against Athena Bitcoin Inc, a company that operates more than 4,000 Bitcoin ATMs across the country. The lawsuit alleges that Athena not only has done little to prevent their Bitcoin ATMs being used for fraudulent transactions but also profits itself from the scams involving their Bitcoin ATMs through undisclosed fees. Most scams involving Bitcoin ATMs and other cryptocurrency ATMs are as a result of imposter scams in which scammers pose as representatives of trusted institutions such as banks, law enforcement agencies or tech companies who tell the targeted scam victims that their bank accounts have been compromised and they need to protect their funds by withdrawing all of their money from their bank accounts and send it through a Bitcoin ATM to the scammer who tells their victim that the money will be held securely for them. The scammer provides a QR code to be used to send the funds to the scammer’s Bitcoin wallet. Scammers love Bitcoin ATMs because the money is sent quickly, anonymously and irreversibly. The scammers quickly launder the funds by transferring them to other cryptocurrency wallets or convert it to cash using offshore Bitcoin exchanges. According to the FBI, total losses attributed to scams involving cryptocurrency ATMs in 2024 were $246.7 million with complaints of cryptocurrency ATM fraud increasing 99% over 2023. Losses for the first six months of 2025 have already reached $240 million. FBI statistics also noted that people over 60 were three times more likely to be victimized by a cryptocurrency ATM scam. In his complaint Schwalb alleges that during the first six months of Athena operating Bitcoin ATMs in Washington DC 93% of the deposits into its Bitcoin ATMs were related to fraud. Making matters worse, Schwalb alleges that Athena profits from the fraudulent use of their Bitcoin ATMs by charging transaction fees of up to 26% on each transaction. The complaint further alleges that Athena allows users to deposit large amounts of cash into cryptocurrency wallets that it was aware were used by scammers. The complaint further alleges that once the victim becomes aware of being scammed, Athena tells the victims that all their funds are lost even though Athena has kept 26% of the money deposited as its fee which could easily be returned to the scam victim. MORE FOR YOU Earlier this year Iowa Attorney General Brenna Bird filed similar lawsuits against Bitcoin Depot and CoinFlip, the two largest cryptocurrency ATM operators in Iowa. So, what can be done to reduce cryptocurrency ATM fraud? To date 20 states have drafted or passed laws or regulations to reduce cryptocurrency ATM fraud such as Colorado which passed a law that included a dollar limit on daily transactions. On the federal level, Senators Dick Durbin of Illinois, Richard Blumenthal of Connecticut, Jack Reed of Rhode Island and Peter Welch of Vermont introduced the Crypto ATM Fraud Prevention Act in the Senate. If passed this bill among other things would limit initial transactions and provide for refunds to scam victims who reported the scams within 30 days. Other steps that could reduce cryptocurrency ATM fraud include: Make daily transaction amount limits particularly for first time users. Have mandatory interactive scam warnings prominently displayed on the ATMs. Use blockchain technology to block transactions involving known scammers. Use AI to recognize and block unusual patterns. Use AI to recognize customer duress through facial recognition and emotion detection. Provide customer support during transactions. Require mandatory refunds as an incentive for cryptocurrency ATM companies to utilize better security measures. As for consumers, the best way to avoid becoming a victim of a cryptocurrency ATM scam is to remember that no legitimate company or governmental agency will ever demand payment through a cryptocurrency ATM or ask you to withdraw your funds and send them through a cryptocurrency ATM.
