Crypto ATM fraud is on the rise. Here’s how to avoid it – NBC 6 South Florida #CriptoNews

Crypto ATMs are popping up everywhere – from gas stations to grocery stores.

They are known as BTMs and are a legitimate way to turn your cryptocurrency into cash or your cash into crypto.

But there is a rising trend of BTM scams targeting unsuspecting victims.

Often, a BTM scam starts when a victim gets a phone from a person they do not know. The scammer tells the victim a story that includes needing to deposit cash into a machine to protect your bank account or fix a problem. They text you a QR code to scan at the machine and this prompts you to deposit your cash into the scammer’s digital wallet.

“Hang up. Call someone in your family. Call someone. A friend. Be careful of these sophisticated schemes,” Peggy Herbert told our NBC Boston Investigative team.

Herbert is warning people after she lost $34,000 to scammers after depositing money into a crypto-currency ATM in 2023.

She told NBC6 she was eventually able to get her money back, but she is just one victim in a growing group of people who have learned first-hand how scammers are using crypto-ATMs known as BTMs to defraud innocent people.

The amount of money lost to BTM fraud has almost doubled each year since 2020. In 2023, the Federal Trade Commission reported $114 million in losses. In the first half of 2024, that number was already at $65 million. The median loss people reported was around $10,000.

BMT regulations differ state by state.

In Florida, BTM operators must register at the federal level and comply with anti-money laundering laws. There is also new legislation, HB 319, recently proposed which would require that kiosk operators provide highly visible warnings and fee disclosures and use blockchain analytics to stop transactions to high-risk digital wallets if passed.

California has already acted. There are daily transaction limits per customer and mandatory receipts for any transaction.

At the federal level, U.S Senate Democratic Whip Dick Durbin (D-IL) recently announced plans to introduce legislation next congress to add regulations for BTMs.

But for now, when you visit a BTM, you will typically see a series of warning messages alerting you of potential scams and to not provide personal information to anyone you don’t know.

NBC6 contacted some of the largest BTM operators.

A spokesperson for CoinFlip told us, in part, “Every day, people across the country use our kiosks for legitimate transactions because they want the freedom to use cash to buy crypto. We coordinate closely with law enforcement to protect consumers and prevent illicit activity, which is why we’re working with Florida legislators to push for state oversight and licensure, and a law that holds all companies to the same standards we follow with scam warnings, blockchain analytics to stop risky transactions and live customer service.” The statement went on to say, “We warn customers of common scams before every transaction. We also require them to share their identity information and acknowledge an on-screen anti-scam disclosure called “Safe in Six,” which aims to stop fraud before it happens. Our customers must confirm that they are sending crypto only to a wallet that they own directly or have control over before they make a transaction.”

Similar to CoinFlip, the BTM operator Bitcoin Depot told us “When consumers are using a Bitcoin Depot ATM machine, the kiosk displays multiple scam warnings at nearly every stage of the transaction process, reminding users to never send Bitcoin to unknown wallets or individuals they don’t personally know and trust. Fraud alerts caution against common scams, such as impersonators claiming to be from government agencies, law enforcement, or utility companies,” adding “Transactions are monitored for suspicious activity, and most machines only accept cash, reducing the risk of card fraud. Bitcoin Depot ATMs do not store cryptocurrency locally, adding another layer of security.”

There are steps federal prosecutors say should help reduce fraud.

Last month, U.S. Attorney Roger Handberg for the Middle District of Florida put a spotlight on BTM use in the state after a Florida woman was scammed into depositing $12,000 into a crypto-ATM and the money was immediately transferred to other accounts, according to investigators.

Handberg says consumers should pay attention to the machine’s warning messages but to be on the lookout that scammers could find another way to target your cash.

“I will tell you as someone who’s done this for more than two decades, we often see that, you know, fraudsters will morph their scheme, you know, once it’s been detected,” Handberg said.

So how can you avoid a crypto-ATM scam? For starters don’t click on unfamiliar links and be leery from phone calls from people you don’t know.

If someone tries to pressure you to act fast to protect your money that could be a red flag. If they ask you to withdraw cash and deposit it into a crypto-ATM you should hang up and call the authorities.