Cryptocurrency ATM scams on the rise as Colorado lawmakers consider regulation

As interest in cryptocurrency increases in the United States, the number of ATMs which facilitate cryptocurrency transactions is as well.

With that convenience in place, scammers have emerged. They have been taking thousands of dollars from vulnerable Coloradans by taking advantage of both the ATMs and a lack of regulation around those machines.

“I had no idea what bitcoin… to tell you the truth, what it is,” one man who asked not to be identified told CBS Colorado.

 However, he didn’t let the lack of knowledge stop him from putting $15,000 into a bitcoin ATM.

Such machines that are now relatively easy to find. They convert dollars into cryptocurrency.

“I got a phone call at home on my cell and basically the person on the other end said they were with the El Paso County Sheriff’s (Office) and they had warrants out for my arrest because of me not showing up for grand jury,” he said.

A text message followed from a spoofed El Paso County Sheriff’s Office phone number that included an image of a warrant with his name on it. It included a list of different charges he was facing and the fines for each one. The scammers told him If he didn’t pay it would mean jail time.

“I was scared, frustrated because I didn’t remember anything about it. Very upset that something like that was happening to me. I couldn’t understand why,” he said.

With the fake warrant was a QR code for a bitcoin wallet.

“They said the way they could do it was there are a couple of bitcoin machines in Colorado Springs that are attached directly to the treasury department. They say they ‘Don’t advertise it but it’s a way that they can collect the money,'” he said.

 The unidentified victim withdrew the money from his bank and drove to one of those machines and deposited the cash.

“It was just basically me standing there and they opened the account. I got to the screen I and put the money in $100 at a time.”

Sgt. Ross Young runs the financial crimes unit at the Mesa County Sheriff’s Office in western Colorado.

“A few clicks and that money can be in another country,” Young said.

After an influx in bitcoin ATM scams in his area, they now have staff dedicated to investigating this type of crime.

“One of the things we realized is that with these crypto ATMs being the medium upon which these scams are perpetrated, trying to get cooperation (and) trying to get information has been difficult,” he said.

In September, the Federal Trade Commission reported a massive increase in losses connected to bitcoin ATM scams. In the first six months of 2024 American’s lost $65 million.

Young turned to Colorado state Sen. Janice Rich, who introduced a bill to regulate those ATMS and require cooperation in Colorado.

“There’s been some instances where they haven’t had any information for like 8 months. By then, that money is gone,” Rich said.

He said the legislature is also working on ways to prevent this type of loss in the future.

“We do want to put a daily transaction limit on there. We do want to have some regulation on when that money can be returned,” Rich said.

Those are protections that could have limited the loss for the man CBS Colorado spoke with and so many others.

“It’s a strain, I’m on fixed income, retired so it came out of savings and it’s lost,” he said.

In response to the influx of bitcoin ATM scams, the FTC shared tips on how to avoid falling victim:

– Never click on links or respond directly to unexpected calls, messages, or computer pop-ups.
– If you think it could be legitimate, contact the company or agency, but look up their number or website yourself. Don’t use the phone number the caller or message gave you.
– Slow down. Scammers want to rush you, so stop and check it out. Before you do anything else, talk with someone you trust.
– Never withdraw cash in response to an unexpected call or message.
– Don’t believe anyone who says you need to use a bitcoin ATM, buy gift cards, or move money to protect it or fix a problem. Real businesses and government agencies will never do that — and anyone who asks is a scammer.