Bitcoin News Today: Bitcoin ATM Fraud Rises 31% in 2024 Amid $247M Losses and Weak AML Controls

Bitcoin ATM fraud has surged in 2024, with reported losses reaching nearly $247 million, a 31% increase from the previous year. The Financial Crimes Enforcement Network (FinCEN) has issued a public warning about the risks associated with convertible virtual currency (CVC) kiosks, which have expanded from 4,100 in 2019 to over 37,000 by 2024. These machines, often lacking adequate anti-money laundering (AML) controls, are increasingly being exploited by criminals for large-scale fraud and money laundering [1].

The rise in crypto kiosk scams is particularly evident in the methods used by fraudsters. Tech support scammers, often contacting victims through fake pop-ups or phone calls, guide individuals—especially the elderly—into converting their funds at nearby ATMs. These machines frequently allow multiple cash-to-crypto transactions without requiring identification, and some impose fees as high as 25%, further masking illicit activity [1].

Elderly individuals over 60 have been disproportionately affected, making up over two-thirds of reported losses. Many victims are manipulated into draining retirement accounts and converting the funds into irreversible blockchain transactions. This demographic is often targeted due to a lack of familiarity with digital currencies and susceptibility to detailed, step-by-step scams [1].

Financial institutions are also advised to remain vigilant. FinCEN has highlighted warning signs, such as large cash withdrawals from elderly clients with no prior crypto activity, or sudden spikes in kiosk usage in high-risk areas like Chicago, where over 1,100 machines are in operation. Blockchain analysis is increasingly being used to trace connections to criminal wallets, yet the complexity of these transactions—such as chain-hopping across blockchains—complicates enforcement [1].

Regulatory responses are beginning to emerge. In the U.S., Washington state’s Spokane city has banned kiosks following FBI reports of $5.6 billion in nationwide crypto fraud. Internationally, some jurisdictions, including New Zealand, are considering or have implemented outright bans on crypto ATMs. FinCEN continues to urge financial institutions to enhance surveillance, report suspicious activity promptly, and support the development of clearer regulatory guidelines [1].

Criminals are employing sophisticated methods to obscure the origins of illicit funds. After receiving cash at a kiosk, they often convert the cryptocurrency into stablecoins and move it across multiple blockchains to evade detection. This technique complicates law enforcement efforts to trace the money back to its source, highlighting the urgent need for better AML systems and stricter oversight of CVC kiosks [1].

The growing use of Bitcoin ATMs in financial crime underscores a critical gap in regulatory enforcement. While some operators require identity verification, many do not, creating a loophole that cybercriminals are exploiting at scale. Without enhanced safeguards and consistent enforcement, the proliferation of these machines could further amplify the threat of cryptocurrency-related fraud and money laundering [1].

FinCEN’s latest alert serves as a call to action for regulators, financial institutions, and the public to address these risks proactively. As digital currency adoption continues to rise, ensuring robust protections for consumers—especially vulnerable populations—remains essential to maintaining the integrity of the financial system [1].

Source: [1] Today's Top Cryptocrime News Stories (https://cybersecurityventures.com/cryptocrime/)