Cracking Down on Crypto ATM Fraud


Policymakers are taking action to combat cryptocurrency ATM fraud as scams reach record levels (Anderssen, 2025). Unlike other payment scams, these scams involve sending cryptocurrency to a fraudster’s Bitcoin wallet using a Bitcoin, or crypto, ATM. (Coinbase).

The incidence of crypto ATM fraud has been increasing since 2020. The FTC reports that in 2023 alone, consumers reported $114 million in losses due to bitcoin ATM fraud (Fletcher, 2024).

In response to the rise in crypto ATM fraud, policymakers are beginning to take action. For example, Iowa’s Attorney General Brenna Bird is suing at least two crypto ATM companies (Anderssen, 2025). The Iowa Attorney General alleges crypto ATM companies have profited off the vast number of scams.

Additionally, Sen. Dick Durbin introduced federal legislation, the “Crypto ATM Fraud Prevention Act” (Harris, 2025). This legislation would put certain limits on crypto ATM transactions in attempt to limit fraud.

How crypto ATM scams work

Crypto ATM scams usually involve a fraudster baiting a victim to send money urgently. The scammer has the victim deposit money into a crypto ATM, exchange the cash for cryptocurrency, and deposit the cryptocurrency into the fraudster’s Bitcoin wallet (State of Connecticut). It is often not until the transfer is made that victims understand they have been defrauded.

Warning signs of a scam

Often times, there are early signs of fraud. For example, fraudsters may ask their victims to withdraw large amounts of money from the bank and direct their victims not to tell the bank how they plan to use the cash. If you are directed make an investment or transaction in secrecy, it is a scam.

How fraudsters bait victims

Fraudsters use a number of techniques to bait their victims into sending cryptocurrency. A common tactic for this kind of fraud is telling the victim they owe an outstanding debt to the state or federal government. Then the victim is told to pay off the debt or fine by depositing money in a crypto ATM (Harris, 2025).

Other common baiting tactics include:

  • Government impersonation scams: Scammers tell victims that they owe the government money and the victim must pay the debt urgently to avoid a penalty (Federal Trade Comission, 2024). In these cases, the fraudster tells the victim that the government accepts payments for fines via crypto ATMs and directs the victim to deposit the amount into the fraudster’s Bitcoin wallet (Harris, 2025).
  • Romance scams: Scammers befriend their victims through social media and dating sites. After gaining the victim’s trust, the scammer asks the victim for money to help deal with an emergency or legal battle (State of Connecticut).
  • Pig butchering: Similar to romance scams, in a pig butchering scam, the bad actor builds a rapport with his victim over time. In these cases, the scammer usually tells the victim to message him through a third-party messaging app, such as WhatsApp. After trust is built, the scammer will tell his victim about an investment opportunity that, “can’t fail,” or is, “easy money.” Then the victim deposits cash into a crypto ATM and deposits the cryptocurrency into the scammer’s Bitcoin wallet (State of Connecticut).
  • Utility scams: Some scammers threaten to shut the electricity, gas, or water off in a victim’s home if a payment is not made. If you are threatened about a utility payment, look up the utility company’s official number and call it (State of Connecticut).

References

Anderssen, E. (2025, February 27). Iowa Attorney General to sue crypto ATM companies. Retrieved from The Gazette: https://www.thegazette.com/news/iowa-attorney-general-to-sue-crypto-atm-companies/

Coinbase. (n.d.). Bitcoin ATMs: how to use them and how do they work? Retrieved from Coinbase. https://www.coinbase.com/learn/tips-and-tutorials/bitcoin-atms-how-to-use-them-and-how-do-they-work

Federal Trade Comission. (2024, September 24). New FTC Data Shows Massive Increase in Losses to Bitcoin ATM Scams. Retrieved from Federal Trade Commission: https://www.ftc.gov/news-events/news/press-releases/2024/09/new-ftc-data-shows-massive-increase-losses-bitcoin-atm-scams

Fletcher, E. (2024, September 3). Data Spotlight: Bitcoin ATMs: A payment portal for scammers. Retrieved from Federal Trade Commission: https://www.ftc.gov/news-events/data-visualizations/data-spotlight/2024/09/bitcoin-atms-payment-portal-scammers

Harris, B. (2025, February 25). To fight scams, Senate bill would limit transactions at crypto ATMs. Retrieved from NBC News: https://www.nbcnews.com/news/us-news/senate-crypto-atm-bitcoin-scam-rcna193495

State of Connecticut. (n.d.). Avoid Scams Involving Virtual Currency Kiosks or “Bitcoin ATMs”. Retrieved from Connecticut's Official State Website: https://portal.ct.gov/-/media/DOB/Consumer/Joint-Consumer-Alert---Virtual-Currency-Kiosk.pdf?bcs-agent-scanner=53e104cb-b97a-514a-97e2-e610c9c9f75c