The Rise of Crypto ATMs and the Growing Threat of Fraud

Crypto ATMs, which first appeared in the early 2010s, offer a seemingly convenient way to exchange cash for cryptocurrencies like Bitcoin without the need for traditional online exchanges. Typically located in establishments such as gas stations, liquor stores, and convenience stores, these kiosks have proliferated across the United States. However, this accessibility has also made them a prime target for fraudsters.

Law enforcement officials nationwide report a surge in scams utilizing crypto ATMs. Scammers exploit the speed and relative anonymity of these transactions to quickly move funds beyond the reach of authorities, leaving victims with little recourse. The ease with which cash can be converted into cryptocurrency, and then rapidly transferred internationally, presents a significant challenge to investigators.

The industry maintains that crypto ATMs provide a valuable service, offering financial inclusion to those who may not have access to traditional banking services. However, critics argue that the lack of robust Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols creates a breeding ground for criminal activity.

Recent investigations have revealed alarming details about the extent of the problem. A 2025 investigation by the International Consortium of Investigative Journalists (ICIJ) and CNN revealed that Bitcoin Depot machines installed in hundreds of Circle K convenience stores facilitated at least $1.5 million in scam transactions. Circle K reportedly received millions in rental fees while Bitcoin Depot profited from a percentage of each transaction, ranging from 15% to 50%.

The investigation further uncovered that Circle K management was aware of the fraudulent activity but continued to renew its contract with Bitcoin Depot. This raises serious questions about the responsibility of businesses that host these machines and their awareness of the risks involved.

Internal documents from Bitcoin Depot, as cited in the Massachusetts complaint, paint a disturbing picture of the company’s knowledge of the scams. In 2021, a due diligence team reportedly found that 90% of customers they interacted with were likely victims of fraud. One employee even warned a top executive that the kiosks were facilitating money laundering on an “extreme volume.” Despite these warnings, the complaint alleges that Bitcoin Depot subsequently weakened its compliance measures, thereby exacerbating the problem.

Between March and September 2023, the company’s own data indicated that 13% to 16% of all funds processed through its machines were linked to scams. Furthermore, Bitcoin Depot allegedly allowed customers to send funds to foreign cryptocurrency exchanges inaccessible to U.S. residents, potentially aiding in the concealment of illicit funds.

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The legal challenges aren’t limited to Massachusetts. Missouri Attorney General Catherine Hanaway launched an investigation in December, sending letters to Bitcoin Depot and four competitors demanding information related to potential consumer protection violations. Hanaway stated the investigations were prompted by “devastating new scams involving the use of Bitcoin ATMs to prey on Missourians.”

Similar allegations surfaced in a 2025 lawsuit filed by Iowa’s Attorney General, where an analysis revealed that over 50% of Bitcoin Depot’s transactions in the state between October 2021 and July 2024 appeared to be connected to scams.

On Tuesday, in response to mounting pressure, Bitcoin Depot announced it would require identity verification for all transactions. However, critics argue this measure is a reactive step that should have been implemented long ago.

What role should businesses that host crypto ATMs play in preventing fraud? And how can regulators effectively balance innovation with consumer protection in the rapidly evolving cryptocurrency landscape?

Frequently Asked Questions About Crypto ATM Scams

1. What is a crypto ATM scam? A crypto ATM scam typically involves a fraudster convincing a victim to purchase cryptocurrency using an ATM and then send it to a scammer’s wallet, often under false pretenses.
2. How can I protect myself from crypto ATM scams? Be extremely cautious of unsolicited requests to purchase cryptocurrency, especially if pressured to act quickly. Never send money to someone you haven’t met in person.
3. Are crypto ATMs regulated? Regulation of crypto ATMs varies by state. Some states have stricter requirements than others, but overall, the industry remains largely unregulated.
4. What should I do if I believe I’ve been a victim of a crypto ATM scam? Immediately report the incident to your local law enforcement agency and the Federal Trade Commission (FTC).
5. Can I recover funds lost in a crypto ATM scam? Recovering funds is often difficult, as cryptocurrency transactions are typically irreversible. However, reporting the scam increases the chances of law enforcement investigation and potential recovery.
6. What is Bitcoin Depot doing to prevent scams? Bitcoin Depot recently announced it will require identity verification for all transactions, but critics argue this is a belated response to widespread fraud.