Bitcoin ATM Fraud Losses Surge 900% to $114 Million in 2023

Elderly Americans have lost millions of dollars after being pressured by scammers into sending them money through Bitcoin ATMs. This has led to a crackdown on Bitcoin ATMs across the United States, with various states and cities implementing new laws to protect consumers from fraud.

In Texas, law enforcement agents used power tools to break into a Bitcoin ATM and recover $31,900 in cash after a family was scammed out of $25,000. While this action helped the fraud victim, it also harmed the small business owner who owned the machine. This incident highlights the growing problem of Bitcoin ATM fraud and the need for stricter regulations.

Spokane in Washington State has banned Bitcoin ATMs altogether, while other states and cities are proposing laws to make it harder for fraudsters to drain the life savings of impressionable consumers. In Illinois, any cash-to-crypto conversions facilitated through these ATMs would need to take a note of the address where funds have been sent. This could help detectives track down scammers, but many seasoned criminals may use obfuscation tools to cover their tracks.

Vermont has passed a law that imposes daily transaction limits of $1,000 on Bitcoin ATMs, which would limit the amount of money victims lose. Nebraska has moved to license ATM operators, requiring them to provide quarterly reports with transaction data and capping fees at 18% to prevent consumers from being ripped off.

The Federal Trade Commission has described Bitcoin ATMs as a “payment portal for scammers.” Official figures show fraud losses from these machines hit $12 million in 2020, surging almost tenfold to $114 million by 2023. Incomplete figures showed losses topped $66 million in the first six months of 2024 alone, indicating it was set to be yet another record-breaking year.

FTC research sheds light on how victims are lured in, how much they lose, and who tends to be the most vulnerable. Scammers often attempt to impersonate governments and businesses, or pretend they’re from tech support. Median losses stand at an “exceptionally high” $10,000, with the government body adding: “In the first half of the year, people 60 and over were more than three times as likely as younger adults to report a loss using a BTM. In fact, more than two of every three dollars reported lost to fraud using these machines was lost by an older adult.”

Lawmakers in the U.S. Senate are attempting to build upon the tightened laws being rolled out at a state and local level. Illinois Senator Dick Durbin has introduced the Crypto ATM Fraud Prevention Act, which would bring in measures designed to protect the public while attempting to limit inconvenience for law-abiding users. New users would be prevented from spending more than $2,000 a day at one of these machines, rising to $10,000 in a 14-day period. Operators would also need to have a detailed conversation whenever a new user is trying to complete a transaction with a value of over $500. Crucially though, they would also be entitled to refunds if a police report is filed within 30 days.

Durbin has confirmed that he won’t be seeking re-election during the midterms in 2026, with the 80-year-old Democrat resigning after decades of service. He also offered an amendment when the GENIUS Act was winding its way through the Senate, warning: “Enough is enough. I urge my colleagues on both sides of the aisle: listen to the people you represent, particularly the senior citizens who are losing their life savings to these scams, and realize that with 30,000 crypto ATMs across the country, more and more of this will occur.”

It remains to be seen whether any of the efforts to prevent crypto ATM losses will make a difference. As Bitcoin’s price rises, a greater number of opportunistic fraudsters will take the opportunity to strike. The crackdown on Bitcoin ATMs is a response to the growing problem of fraud and the need to protect consumers from losing their life savings to scammers. The new laws and regulations being implemented at the state and local level, as well as the proposed Crypto ATM Fraud Prevention Act, are designed to limit the amount of money victims lose and make it harder for fraudsters to operate. However, it is unclear whether these efforts will be enough to prevent crypto ATM losses in the future.