CONNECTICUT, USA — At some point in your life, you’ve probably used an ATM to withdraw cash, but have you used one to buy or sell cryptocurrency? Cryptocurrency ATM scams are on the rise in Connecticut.
There are 511 Cryptocurrency ATMs across Connecticut with more being added every day. Usually, they are found at gas stations and convenience stores. Officials said the simplest way to protect your money and your identity is not to use them.
“We want to provide a service. We thought it was up and coming. We don’t know that much about it,” said Michael Frisbie, the owner of Nobel Service Stations. Frisbie says it’s not a big revenue driver. They get a small commission check each month from the 3rd party vendor. “Like a regular ATM we thought this might be a good service for our customers,” said Frisbie, who added he is open to removing the machine.
The Connecticut State Police warn these machines are largely unregulated.
“If you walk up to a machine and want to buy $1,000 worth of BitCoin, not every machine is going to require you to show a photo I.D.” explained Detective Matthew Hogan of the Connecticut State Police.
Machines are a tool increasingly used by scammers.
“The scam could be anything. It could be the Grandparent scam where they say hey your kid has been arrested by the police we need you to bring bail money in the form of Bitcoin so go to this ATM machine that we are going to direct you to. Take your cash, put it in, and now scan this wallet address that we gave you,” explained Detective Hogan.
Most machines allow you to use either cash or a card to buy crypto. Not only are they a favored tool for scammers, but they often charge high transaction fees of up to 25%.
“There’s always the lure of easy money. In the past, it was going up by thousands of dollars. But I think it’s basically gambling,” said Frederick Scholl, the Cyber Security Director for Quinnipiac University.
Once your cold hard cash is converted into a digital asset, it can take just seconds to end up in a foreign account overseas.
“Once it's gone from the kiosk to the exchange then typically they’ll layer it like they would any other money laundering scam. They put it in different exchanges, they’ll split the money up and parse it off,” said Detective Hogan.
The machines are found in many big city gas stations and cater to an already economically disadvantaged demographic.
“This area is just a total dumpster fire and I would not go anywhere near one of these machines,” added Scholl.
State lawmakers have drafted a bill this session that would regulate Cryptocurrency ATMs across the state and standardize their security settings.
“The sooner we get that bill passed the better so that we get the Wild Wild West turned into a reasonable situation,” said State Rep. Tom Delnicki, the Republican ranking member of the legislature’s Banking Committee.
Right now these machines don’t fall under the same scrutiny and oversight as regular ATMs because the transaction doesn’t involve a bank account. They are considered ‘kiosks.’
“The federal government, the SEC, and Congress is looking at this as well but there are some things we can do on the state level. To regulate those kiosks as money transmitters which allows the commissioner of banking to have purview over it,” explained State Rep. Jason Doucette, a Democrat, and Co-Chair of the Banking Committee.
Nationwide, crypto hackers stole a cumulative $ 3.8 billion last year.
Matt Caron is a reporter at FOX61 News. He can be reached at mcaron@fox61.com. Follow him on Facebook, Twitter and Instagram.
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