Crypto ATMs, or kiosks, are increasingly being used as scam tools across the country. The machines are often unregulated and unregistered, providing a loophole for criminals to take advantage of unsuspecting victims.
In October 2021, artist Joe Samuels thought he was contacting the IT department of his computer company. During the call, he gave someone access to remotely fix his computer, which appeared to work.
However, a few months later, he received another call from someone claiming to be from the same IT department. They told him they had mistakenly deposited $20,000 into his checking account and demanded he send it back through a Bitcoin ATM.
“And they’re telling me, calling me. ‘You’ve got to pay us back. Otherwise we’re going to get the FBI,'” said Samuels, who is 84.
Fearing for his safety, Samuels complied and deposited $20,000 in cash at a Bitcoin of America kiosk located near his apartment in Hartford, Connecticut. Five days later, he discovered that Scammer He actually transferred his own money from his savings account to his checking account.
The crypto kiosk Samuels used was confiscated but Samuels paid the price: he spent a week in hospital and two years later, he has not been able to recover the money. He is now living with his son as he cannot afford to run his own family.
“That’s what I have to deal with. But then again, you know, I feel very lucky. I just take the opportunity to paint. And put the work away,” Samuels said.
At the moment, there are around 32,000 crypto ATMs and kiosks across the country – up from 1,200 in 2018. Although they are similar to regular ATMs, they convert cash into digital cryptocurrency that goes into a digital wallet instead of a traditional bank account.
Bitcoin of America, accused of helping scammers who stole millions from victims using its kiosks, faces conspiracy and money laundering charges along with its CEO and two others. The kiosks in Ohio were allegedly unlicensed and profitable.
Bitcoin of America CEO Sonny Meraban was arrested in Miami earlier this month and charged with crimes including money laundering and conspiracy.
According to Connecticut State Police Detective Matthew Hogan, who specializes in financial crimes and cryptocurrencies, some of these machines are safe for consumers. But he warns that due to the lack of regulation around them, many are used for scams or crimes such as money laundering. Hogan also believes they were deliberately placed in high-crime areas.
“I think they’re strategically placed on purpose because they’re using high percentages in high crime locations,” Hogan said.
CNET’s cybersecurity expert Bree Fowler warns that crypto ATMs pose a unique risk because many are unregulated and unlicensed.
“They’re, you know, no different than soda or candy machines on some level. If you see one of these things, don’t use them right away,” Fowler said.
CBS News has reached out to Bitcoin America for comment on the allegations. The company did not respond, and the CEO did not respond to a request for comment. The American website Bitcoin has also been shut down.
Before Meraban was charged, the company claimed in court that it had given Samuels’ money to a third party whose identity is unknown. A judge ordered that Samuels’ money be transferred to America’s Bitcoin. However, now that the company is facing legal trouble, Samuels’ family is considering suing Bitcoin America to recover their lost funds.