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Federal and state officials across the United States are raising concerns about the surge in Bitcoin ATM scams, which have reportedly drained millions of dollars from unsuspecting victims particularly senior citizens.
Washington, D.C., Attorney General Brian Schwalb has called out the growing trend, emphasizing that unregulated crypto kiosks are increasingly being exploited by criminal groups.
Bitcoin ATMs, designed to simplify access to cryptocurrencies, have instead become conduits for fraud. Victims are often tricked into believing they owe fines or need to rescue family members in legal trouble. Scammers then direct them to withdraw cash and deposit it through nearby Bitcoin ATMs effectively converting funds into untraceable digital assets.
“Bitcoin ATMs are a tool that scammers, that criminals, are using to separate people, including D.C. residents, from their hard-earned money,” Brian Schwalb, Attorney General, Washington D.C.
According to the Federal Trade Commission (FTC), reports of such incidents have tripled in the past two years, with older Americans making up the majority of victims. The agency continues to warn that once money is sent through these kiosks, recovery is almost impossible.
In one recent case, Diane Reynolds, a retiree from Maryland, was defrauded after receiving what appeared to be a legitimate computer security alert. Believing her system had been compromised, she followed instructions from a supposed “tech support” agent who claimed hackers had accessed her bank accounts.
Under intense pressure, Reynolds withdrew $13,100 from her savings and deposited it into a Bitcoin ATM at a gas station operated by Athena Bitcoin, which runs more than 4,000 kiosks nationwide. It was only later she realized she had fallen prey to one of the increasingly common Bitcoin ATM scams.
“This was not just a random call as it felt official. They knew my bank details and made it sound urgent,” Reynolds said in a written statement shared by her attorney, Vaught Stewart.
Federal officials note that this manipulation technique using fear, urgency, and claims of authority is consistent with other reported Bitcoin ATM scams targeting vulnerable populations.
The U.S. Department of Justice has also identified these tactics as part of broader financial crime operations that combine social engineering with cryptocurrency transactions to evade traceability.
In September, Attorney General Schwalb filed a civil lawsuit against Athena Bitcoin, accusing the company of profiting from the fraudulent activity occurring through its kiosks. The suit alleges that Athena failed to implement adequate anti-fraud safeguards, including real-time monitoring and transaction verification tools.
“Athena, as a Bitcoin operator, knows that its kiosks are being used by this element, and yet [has] failed to put proper anti-fraud prevention systems in place to keep it from happening,” Schwalb said.
The complaint further accuses Athena of charging undisclosed fees on deposits that, in many cases, were proceeds of scams. Schwalb argues that this model allows the company to profit indirectly from crime-linked transactions as an accusation Athena strongly denies.
In its official response, the company stated:
“We employ aggressive safety protocols to protect the financial interests of our customers. Our kiosks feature multiple safeguards from prominent warnings and daily transaction limits to five separate verification screens designed to stop coerced transactions.” — Athena Bitcoin spokesperson
Still, critics say these measures are insufficient. Legal experts suggest the case could set a precedent for how regulators classify the responsibilities of crypto service providers in preventing Bitcoin ATM scams.
The growing wave of Bitcoin ATM scams has reignited debate around cryptocurrency regulation in the United States. Unlike banks and licensed money transmitters, most Bitcoin ATM operators are not subject to stringent Know Your Customer (KYC) or anti-money laundering (AML) requirements at the state level.
The Financial Crimes Enforcement Network (FinCEN) has warned that some operators are failing to register appropriately, leaving gaps that fraudsters can exploit. Several states, including New York and Illinois, are now considering new frameworks to enforce stronger compliance standards.
Experts also recommend requiring operators to install real-time transaction monitoring systems that flag suspicious deposits similar to systems already used by regulated crypto exchanges.
As law enforcement agencies expand their investigations, prosecutors say they will continue holding operators accountable if found complicit or negligent in preventing Bitcoin ATM scams.
Authorities have urged citizens especially the elderly to exercise caution when instructed to send money via Bitcoin ATMs. The Consumer Financial Protection Bureau (CFPB) advises that legitimate institutions or government agencies will never request payments in cryptocurrency.
For now, as lawsuits proceed and regulatory reviews intensify, officials warn that public awareness remains the strongest defense.
“Education is our first line of protection,” Schwalb emphasized. “Until these systems are fully secured, vigilance is the only way to stop these Bitcoin ATM scams from spreading.”
