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There’s a remarkable new report from the CNN Investigates team about crypto ATMs, devices that may be at your corner store and which allow people to exchange money for cryptocurrency such as Bitcoin.
See the full investigation, with videos and visualizations.
I was struck by the detail that CNN documented at least a dozen potential fraud cases tied to a single ATM. That’s an indication not just that one ATM has a problem, but that these cases of fraud are rampant in the US.
Shame at being duped may keep many people from reporting that they’ve fallen victim to fraud, and when they do, authorities are frequently at a loss to help. But now, by using crypto ATMS — there’s probably one near your house — scammers have changed the way things work. And companies that operate the machines are profiting from it.
The companies behind these crypto ATMs strongly disputed allegations that they profit from scams and listed various efforts to protect consumers. There’s more about all of that in the story.
I talked to three of the CNN reporters who worked on the investigation, Yahya Abou-Ghazala, Curt Devine, and Majlie de Puy Kamp. They answered my questions by email. Our conversation is below:
What made you realize these crypto ATMS were a story? Was it something specific?
We previously wrote about state attorneys general attending lavish foreign trips paid for by the industries they oversee, including a luxury trip to Rome earlier this year. Our colleagues traveled to Italy to document the trip and noticed someone stand out among the attendees. This person appeared younger than other attendees and was not a recognizable official or lobbyist. This turned out to be Ben Weiss, the CEO of CoinFlip, a crypto ATM company that had been sued by the state of Iowa for allegedly profiting from scams (which the company disputes). We didn’t know much about crypto ATM companies at the time, but we realized this was an industry that was both gaining influence among government officials and coming under scrutiny.
These scams seem to go by a script where the victim is intimidated by a threatening phone call and an urgent demand for money. What have the crypto ATMs changed?
Crypto ATMs have made it easier to quickly send large volumes of currency to places out of reach of US law enforcement. Rather than sending victims to buy a bunch of gift cards for $500 each, for example, scammers can send them to one machine to deposit thousands of dollars at one time and then funnel the currency overseas.
Scammers also prey on the average person’s lack of knowledge about the machines themselves. From our experience reporting this story, many people aren’t familiar with crypto ATMs or how they work. Scammers tend to exploit this, especially when they are pretending to be law enforcement or government officials. They send often elderly victims to these machines under the assumption that the crypto ATM is a legitimate way to pay off (made up!) fines, fees, or debts to companies or the government. In one incident, a scammer referenced the Strategic Bitcoin Reserve that President Donald Trump established to make a victim more comfortable with stuffing cash into ones of these machines.
So many people — including me — have gotten these phishing calls from people who have personal information about you. They’re scary. Many people probably figure out it’s a scam before handing over money. How often are the calls successful?
That is difficult to answer, but given how prevalent these scam texts are, we have to assume they are lucrative for criminals. The FBI told us Americans lost around $240 million to crypto ATM scams in the first half of this year. What’s interesting is that we’ve seen people from all walks of life fall for these scams, including doctors and CEOs.
It’s easy to blame the scam victim for falling for the ruse, but the fact of the matter is, if the scam is targeted right, you will probably fall for it too. And these days there is so much information on people available online that it doesn’t take much for a scam to be targeted enough to be believable.
Is there evidence that there is an organized effort behind these? What do we know about the people doing the targeting?
In most local cases we reviewed, the scammer’s identity remains a mystery. But in some cases, specific people have been charged — like a citizen of India indicted last year, who prosecutors called “a high-level member of a sophisticated, organized, transnational fraud ring.” That case remains pending and much of it is sealed. Some Americans have also been charged. We also know there are scam compounds in places like Myanmar, where thousands of people are held against their will and forced to work for low wages to carry out financial scams that target Americans. So it’s certainly possible that some of the scammers who try to push people in the US to transfer them cash through crypto ATMs are themselves victims of crimes.
You tied multiple scams to a single ATM. How long did that process take? Is there a way for people to figure out if ATMs near them have been used in scams?
We requested records from police departments, the Federal Trade Commission and state offices across the country and went through each incident report to log the details in a spreadsheet. It took us about four months to receive the records and log more than 700 cases. It was in that process of manually reading through every report that we started to notice recurring addresses for the same location or store. Once we put everything together, the spreadsheet became a trove of information allowing us to see how much money people had lost, what sort of scam had targeted them and which ATMs they used.
It would be time-consuming to replicate that process, and the point is not whether a particular crypto ATM has been repeatedly used by scammers. The point is that these scams are now rampant, so if someone says you need to deposit money into one of these machines to pay a fine or avoid a penalty, that’s almost certainly a scam.
The crypto ATM owners say most of the transactions are legitimate. Is there any data to back up that claim?
That is a great question, with a bit of a convoluted answer. Some of the companies have pointed to a report by the analytics group TRM Labs, which found that 1.2% of cash-to-crypto transactions were illicit in 2023. That’s a relatively small figure.
But some law enforcement investigations that have obtained data from particular crypto ATM companies and interviewed customers have alleged scams account for much higher percentages of those companies’ business. The DC attorney general alleged that more than 90% of deposits in one company’s ATMs came from fraud over the span of months, which that company disputes.
One thing that sticks out is that there appears to be little law enforcement can do after a person uploads cash to the crypto ATM. What are the roadblocks to recovering money?
Once you insert cash into a crypto ATM, that currency can rapidly be transferred just about anywhere in the world. The problem with recovering the money afterward is that scammers often direct the funds to cryptocurrency exchanges outside of US jurisdiction that are less likely to cooperate with US law enforcement.
Are lawmakers talking about some kind of regulation? What are some of the remedies being discussed?
More than a dozen states have passed laws that seek to blunt crypto ATM scams. They impose requirements like daily transaction limits on the machines, which seek to reduce what scam victims may lose. As lawmakers have sought to crack down, crypto ATM companies have hired lobbyists across the country and have even pushed their own model legislation with fewer protections. In Missouri, for example, legislators passed regulations this year that matched model legislation passed along by CoinFlip in another state nearly word-for-word, with no transaction limits. Some federal lawmakers have pushed for tighter rules, but remember, the Trump administration has relaxed oversight of the crypto industry. So these regulation debates may play out for years to come.
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