Bitcoin News Today: DC’s Legal Push to Stop Crypto ATM Scams Preys on Elderly with Hidden Fees and No Refunds

DC Attorney General Brian L. Schwalb has filed a lawsuit against Athena Bitcoin, Inc., alleging the company’s cryptocurrency ATMs (BTMs) are being used to exploit elderly and vulnerable residents through fraudulent activities. The lawsuit, announced on June 2024, claims 93% of deposits made at Athena’s BTMs in Washington, D.C., are the result of scams targeting older individuals. According to the Office of the Attorney General (OAG), nearly half of all deposits were flagged as fraudulent, with victims’ median age at 71 and a median loss of $8,000 per transaction. One individual reportedly lost $98,000 across 19 transactions within days [1].

The OAG investigation highlights a pattern of Athena profiting from undisclosed fees and failing to implement adequate anti-fraud measures. The lawsuit further alleges that Athena’s BTMs are exploited by scammers who manipulate victims into sending cash to fraudsters using the machines. These scams often involve deceptive tactics, such as fake tech support pop-ups or impersonation of trusted institutions, which pressure victims into acting quickly without questioning the legitimacy of the request [2].

Athena’s fee structure has come under scrutiny for being significantly higher than industry standards. The company charges up to 26% in transaction fees per deposit—far above the typical 0.24% to 3% range seen in other cryptocurrency platforms. These fees are not clearly disclosed at the point of transaction, with the company introducing a vague reference to a “Transaction Service Margin” in its terms of service in June 2024. The absence of transparency has led to accusations of deceptive business practices [1].

Victims attempting to seek refunds are allegedly met with a rigid “no refunds” policy, even after reporting fraud. Athena is accused of requiring scam victims to sign releases that absolve the company of liability and blaming users for not heeding onscreen warnings. This policy, according to the lawsuit, exacerbates the harm to victims and discourages them from pursuing restitution [1].

The legal action asserts that Athena’s operations violate the District’s Consumer Protection Procedures Act and the Abuse, Neglect, and Financial Exploitation of Vulnerable Adults and the Elderly Act. The lawsuit seeks restitution for victims, civil penalties, and an order mandating Athena to revise its business practices to align with legal standards. Schwalb emphasized the urgency of the case, noting that Athena’s machines have been “intentionally used by criminals to exploit elderly and vulnerable residents” [2].

The rise in Bitcoin-related scams has not gone unnoticed beyond the legal sector. Financial institutions such as Westerra Credit Union have issued warnings to customers about the growing trend of scammers directing victims to deposit large cash sums into Bitcoin ATMs. The schemes often involve high-pressure tactics, such as claims of account compromise and demands for immediate action. These reports underscore the need for greater public awareness and safeguards against such fraudulent behavior [3].

Source:

[1] Office of the Attorney General (OAG) (https://oag.dc.gov/release/attorney-general-schwalb-sues-crypto-atm-operator)

[2] WJLA (https://wjla.com/news/local/dc-attorney-general-schwalb-sues-athena-bitcoin-crypto-atm-cryptocurrency-scams-washington-seniors-fraud-financial-exploitation-hidden-fees-teller-machines-consumer-protection-lawsuit-investigation)

[3] Westerra Credit Union (https://edge.uat.marketing-site.westerracu.com/news/articles/bitcoin-scams-are-increasing-heres-how-to-stay-safe)