Over $110 Million lost to Bitcoin ATM scams in 2023, FTC warns

Alexandru_BD

The rise of cryptocurrency has led to a surge in criminal activities, with scammers exploiting the relative anonymity and irreversible nature of these transactions. In 2023, Americans lost over $110 million to Bitcoin ATM scams, according to the Federal Trade Commission (FTC). These scams are becoming increasingly sophisticated, targeting individuals through various deceptive tactics and they are lucrative enough to have caused another $66 million in loss in 2024 as well. How do these scammers operate and what would I need to do to stay safe, you may wonder. First things first though:

What is a Bitcoin ATM?

A Bitcoin ATM (Automated Teller Machine) is a kiosk that allows non-technical people to buy or sell Bitcoin and, in some cases, other cryptocurrencies. Unlike traditional ATMs connected to a bank account, Bitcoin ATMs are connected to the internet and interact with a cryptocurrency exchange.

Users can insert cash or use a debit card to purchase Bitcoin, which is then sent to their Bitcoin wallet (a digital wallet app or a physical hardware wallet). The user scans a QR code from their wallet app, and the purchased Bitcoin is transferred to that address. Some Bitcoin ATMs allow users to sell Bitcoin for cash. The user sends the Bitcoin to a specified wallet address provided by the ATM. Once the transaction is confirmed on the blockchain, the ATM dispenses the equivalent amount of cash.

Bitcoin ATMs provide a convenient way for people to buy and sell Bitcoin without needing to go through a traditional exchange, making cryptocurrency more accessible to the general public. However, the convenience of Bitcoin ATMs has also made them a target for scammers, as transactions are typically irreversible, and anonymity is often preserved.

How Bitcoin ATM scams work?

Bitcoin ATM scams typically involve scammers convincing victims to use a Bitcoin ATM to send them money under false pretenses. Here’s how these scams often play out:

The Initial Contact

Scammers reach out to victims through phone calls, emails, or social media, pretending to be government officials, law enforcement officers, or representatives from legitimate companies. They might claim that the victim owes money for taxes, has won a prize, or needs to make an urgent payment to avoid legal trouble.

Tip: Always verify the identity of anyone asking for money. Legitimate government agencies or companies will never request payment via Bitcoin ATM.

The Payment Request

Once the scammer has gained the victim's trust, they instruct them to withdraw cash and visit a Bitcoin ATM. They provide a QR code that the victim is told to scan at the ATM, which directs the Bitcoin to the scammer’s wallet.

Tip: Be wary of anyone asking for payment through unconventional methods like Bitcoin ATMs. Scammers often apply pressure, using threats or urgent demands to compel victims to act quickly.

After the transaction is completed, the money is gone, and due to the nature of cryptocurrency transactions, it’s nearly impossible to recover.

Tip: Cryptocurrency transactions are irreversible, so always double-check before making any transaction, especially if it involves significant sums of money.

Who Is targeted? Scammers often target individuals less familiar with cryptocurrency, including older adults and those new to digital finance. However, anyone can fall victim if they are not careful. Scammers use various methods to find and deceive their victims, including phishing emails, fake customer support calls, and social media messages. They may also exploit recent events or news to craft convincing stories.

Common Types of Bitcoin ATM Scams:

• Government Impersonation Scams

Scammers pose as IRS agents or law enforcement officers, claiming that you owe back taxes or are involved in criminal activity. They demand payment through a Bitcoin ATM to resolve the issue.

Tip: The IRS or police will never ask for payment via Bitcoin. Always hang up and contact the agency directly if you receive such a call.

• Romance Scams

Scammers build fake online relationships with victims, eventually asking for money to help with a financial crisis. They direct the victim to send Bitcoin through an ATM.

Tip: Be cautious about sending money to someone you haven’t met in person, especially through non-traditional methods like Bitcoin ATMs.

• Prize or Sweepstakes Scams

Victims are told they’ve won a prize or lottery but must pay fees or taxes upfront using Bitcoin. The scammer provides a QR code for payment via a Bitcoin ATM.

Tip: Legitimate sweepstakes do not require payment to claim a prize. If you’re asked to pay, it’s likely a scam.

• Tech Support Scams

Scammers impersonate tech support from reputable companies, claiming your computer is infected and you need to pay for repairs with Bitcoin. They guide you to a Bitcoin ATM to complete the transaction.

Tip: Tech support will never demand payment through Bitcoin ATMs. Always verify such requests directly with the company.

How to Protect Yourself:

• Stay skeptical: Be cautious of unsolicited calls, emails, or messages asking for payment through Bitcoin ATMs. Always verify the request through official channels before acting.
• Educate yourself: Familiarize yourself with how Bitcoin ATMs work and the types of scams that exploit them. Knowledge is your first line of defense.
• Limit sharing personal information: Scammers often use personal details to gain your trust. Be careful with what you share online and with whom you communicate.
• Use trusted resources: Only use Bitcoin ATMs for legitimate transactions with trusted entities. Avoid using them based on instructions from unknown or unverified sources.
• Report fraud: If you suspect you’ve been targeted by a scam, report it to the FTC, your local law enforcement, or the Bitcoin ATM provider.
• Share your experience on forums or with your family and friends so other people could learn from it.

TaxiMagicien42

Hello @Alexandru_BD

Personally, I have very little knowledge in the field of cryptocurrency.
So, thank you for this article in which I learned and discovered things.

Thank you.

Regards,