Bitcoin News Today: "Seniors Robbed Blind: D.C. Takes On Crypto ATMs Preying on Vulnerable"

The District of Columbia’s Office of the Attorney General (OAG) has filed a lawsuit against Athena Bitcoin, Inc., one of the largest operators of Bitcoin Automated Teller Machines (BTMs) in the United States, accusing the company of enabling fraudulent activities and profiting from hidden fees. The lawsuit, announced by Attorney General Brian L. Schwalb, alleges that Athena’s machines are being used predominantly to facilitate scams targeting elderly and vulnerable residents, with a significant number of deposits linked to fraudulent transactions [1].

According to Athena’s own internal data collected over the first five months of operations in the District, 93% of all deposits into the company’s BTMs were the direct result of scams. Nearly half of these transactions were flagged by Athena as fraudulent. The median age of victims was 71, with the median loss per scam transaction amounting to $8,000. In one extreme case, a victim lost a total of $98,000 across nineteen transactions within a short time period [1]. The OAG investigation highlighted that Athena’s failure to implement sufficient anti-fraud measures has created an environment where international fraud can occur unchecked, particularly targeting seniors and other vulnerable groups [1].

Athena’s BTMs allow users to convert cash into Bitcoin, which is then deposited into a digital wallet. While such a wallet should belong to the user purchasing the cryptocurrency, the OAG noted that in many reported scams, users were tricked into transferring large sums of money directly to scammers [1]. The lawsuit further states that Athena has a “no refunds” policy, even when users seek to recover funds lost in fraudulent transactions. This includes refusing to return undisclosed fees, some of which can reach up to 26% of the transaction value. In comparison, fees for Bitcoin transactions via standard apps and exchanges typically range between 0.24% and 3% [1].

In an effort to obscure these high fees, Athena added a vague reference to a “Transaction Service Margin” in its Terms of Service in June 2024, without clearly disclosing the actual amount or labeling it as a fee [1]. The OAG also criticized the company’s refund policy, which requires victims to sign away future liability, blaming users for not reading onscreen warnings. These practices, the lawsuit argues, further exploit victims and deter reporting of fraud [1].

The OAG is seeking restitution for victims, civil penalties, and an order compelling Athena to modify its business practices to comply with District law. The lawsuit specifically cites violations of the Consumer Protection Procedures Act and the Abuse, Neglect, and Financial Exploitation of Vulnerable Adults and the Elderly Act. The OAG has also emphasized the broader issue of underreporting financial abuse among the elderly, citing challenges such as fear of retaliation and cognitive or physical limitations that prevent victims from reporting scams [1].

The case is being handled by Assistant Attorneys General Anabel Butler and Jason Jones, along with other officials from the Civil Rights and Elder Justice Section. The OAG has also provided resources for residents to report abuse or fraud, including hotlines and contact details for Adult Protective Services and the Metropolitan Police Department [1].

Source: [1] Attorney General Schwalb Sues Crypto ATM Operator (https://oag.dc.gov/release/attorney-general-schwalb-sues-crypto-atm-operator) [2] DC sues crypto ATM operator for 'exploiting' residents (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)