How fraudsters use cryptocurrency ATMs to target victims
Mary Handeland, a real estate agent in Grafton, Wisconsin, found a match on a dating app last year. He said that his name was Mike and that he was an engineer for a defense contractor in Texas.
Within two months of texting and talking, Mike told Handeland, 71, that he loved her. Then he asked her for money.
Handeland was instructed to deposit cash into machines known as cryptocurrency ATMs. Often found inside grocery stores, gas stations and smoke shops, the kiosks resemble conventional ATMs but convert cash into cryptocurrency.
In 19 transactions starting last October, Handeland deposited $98,300 into the machines. All of it vanished — as did Mike, who turned out to be a fiction.
“I don’t even know what happened to me,” Handeland said. “The way you’re manipulated, it’s almost like you’re in some kind of vortex.”
Handeland’s experience puts a spotlight on cryptocurrency ATMs, which have proliferated across the country and come under scrutiny as a tool for scammers. Crypto ATM operators are in at least 28,000 locations, according to data from the Treasury Department’s Financial Crimes Enforcement Network. That is more than twice the number of Wells Fargo ATMs.
The kiosks, which are run by companies such as Bitcoin Depot, CoinFlip and Athena Bitcoin, help people convert cash into cryptocurrencies at physical locations. After their cash is deposited, the companies send the money to cryptocurrency accounts, which are akin to digital mailboxes for cryptocurrency. The ATM operators charge fees for processing transactions.
But the kiosks have become a hub for financial crimes, according to law enforcement. Last year, the FBI’s Internet Crime Complaint Center tallied nearly 11,000 complaints about the machines that totaled $246.7 million in losses. And in the first seven months of this year, about $240 million were lost in fraud involving cryptocurrency ATMs, according to FBI estimates.
The ATMs are just one corner of illicit activity in the cryptocurrency industry, which has long been embroiled in money laundering schemes and scams. But the machines stand out because they are easily accessible and can be used to target the most vulnerable people, said Aidan Larkin, CEO of Asset Reality, which builds tools to help law enforcement seize assets like cryptocurrency.
“For less sophisticated victims who don’t have technology experience, cryptocurrency ATMs are the easiest way to extract value from them,” he said.
From 2024 to the first half of 2025, cryptocurrency ATMs were linked to illicit transactions at a rate that was more than 17 times higher than the broader crypto industry, according to TRM Labs, a crypto analytics company.
The machines began appearing in cafes, convenience stores, and gas stations in the 2010s after the advent of Bitcoin. Among the ATM operators was Bitcoin Depot, which was founded in 2016 by Brandon Mintz, then a recent college graduate. To broaden access to bitcoin, he wanted to establish networks of kiosks, helping people who do not have bank accounts or who have trouble buying cryptocurrency through other means, Mintz has said.
In 2023, Bitcoin Depot went public through a deal with a special purpose acquisition company, or SPAC. The company has more than 9,000 ATMs, it said, and is the largest such network in North America. Since its inception, it has processed $3.3 billion in 4 million transactions.
Once the machines convert cash into cryptocurrency, though, the digital currencies can be shuttled to jurisdictions beyond the reach of U.S. law enforcement as part of scams. Victims rarely recover their losses, law enforcement said.
California, Illinois, and more than a dozen other states have clamped down on the ATMs. Some have capped transaction volumes and fees that cryptocurrency ATM operators charge.
When California debated whether to institute caps on cryptocurrency ATMs in 2023, Alexander Gammelgard, then the president of the California Police Chiefs Association, warned of the dangers of the kiosks.
They “empower international criminal organizations to steal funds from California residents without the involvement of any bank or other financial institution that could help law enforcement agencies catch the criminals and recover stolen property,” Gammelgard wrote in a letter to a state lawmaker supporting the proposed regulations.
That year, California passed a suite of regulations that capped cryptocurrency ATM transactions at $1,000 a person a day and fees at $5 or 15% of the transaction amount, whichever was greater.
Many cryptocurrency ATM operators have said scams are a small portion of transactions. Chris Ryan, chief legal officer of Bitcoin Depot, told Texas lawmakers this year that scams made up 2% to 3% of its total U.S. transactions. In a statement, the company said that its priority was to protect consumers and that it had one of the industry’s most comprehensive compliance programs.
Byte Federal, which operates more than 1,200 cryptocurrency ATMs, said transactions from reported scam victims were 1.2% of transactions from July 2024 through the first half of this year. Paul Tarantino, the company’s CEO, said Byte Federal called customers ages 60 and older when they registered to use the machines to alert them of possible scams and stopped more than 80% of them from conducting a transaction.
Many cryptocurrency ATM operators have also posted scam warnings on their machines and required customers to attest that they are depositing money into their own cryptocurrency accounts, not those managed by others. They also said they worked with law enforcement.
Sung Choi, the chief operating officer of Coinme, which makes software for ATMs, said the Seattle-based company had gotten better at identifying and stopping potentially fraudulent transactions but that criminals were still able to find ways around its scam-prevention measures.
“As much as we try, criminals are very good at what they do, and they seem to generally be a step ahead,” Choi said.
Athena Bitcoin said that it worked to prevent fraud, but that it does not control users’ decisions, just as a bank is not responsible if someone withdraws money and sends funds to someone else. CoinFlip said it works to prevent fraud and has high standards of compliance and transparency.
For scam victims who are directed to use the kiosks, the consequences can be devastating. In 2022, Connie Ruth Morris, a retired nurse in Amarillo, Texas, began receiving texts from someone claiming to be Brazilian actor and singer Daniel Boaventura after she joined an online fan group for him.
After several days of texting, the person proclaimed his love for Morris, now 72. He asked her to send money through cryptocurrency ATMs to help him pay off personal debts and to buy a home together.
Morris, who had been married for more than 45 years, agreed. Over about six months, she said, she deposited approximately $300,000 through cryptocurrency ATMs. She also sent four iPhones and a $200 gift card.
In May 2023, Morris informed her husband she was leaving him for Boaventura. Her son said she had been tricked.
By then, much of their family’s nest egg was gone. Morris and her husband have since divorced.
“I was so brainwashed that I lost touch with reality,” she said. “I was always the one that would help my son and grandkids, and I can’t do that anymore.”
This article originally appeared in The New York Times.