Unregulated crypto ATMs give criminals a loophole to prey on unsuspecting victims
Crypto ATMs, or kiosks, are increasingly being used as a tool for scams across the country. The machines are often unregulated and unregistered, providing a loophole for criminals to take advantage of unsuspecting victims.
In Oct. 2021, artist Joe Samuels thought he was contacting his computer company's IT department. During the call, he granted 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 that 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 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 into a Bitcoin of America kiosk located near his apartment in Hartford, Connecticut. Five days later, he discovered that the scammers had actually moved his own money from his savings account into his checking account.
The crypto kiosk that Samuels used was seized but Samuels paid the price: he spent a week in the hospital and two years later, he has not been able to recuperate the money. He is now living with his son since he can not afford to live on his own.
"That's what I gotta deal with. But then again, you know, I feel very fortunate. I take the opportunity to just paint. And put the work away," Samuels said.
Right now, there are about 32,000 crypto ATMs and kiosks across the country – up from 1,200 in 2018. Although they resemble regular ATMs, they convert cash into digital cryptocurrency that goes to a digital wallet instead of a traditional bank account.
Bitcoin of America, accused of aiding scammers who stole millions from victims using its kiosks, faces charges of conspiracy and money laundering along with its CEO and two others. The kiosks were allegedly unlicensed and profitable in Ohio.
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 cryptocurrency, 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 like money laundering. Hogan also believes that they are deliberately placed in high-crime areas.
"I think they're strategically placed on purpose because they're getting a higher percentage of use in those locations of high crime," Hogan said.
Cybersecurity expert Bree Fowler from CNET warns that crypto ATMs pose a unique risk because many are unregulated and unlicensed.
"They're, you know, on some levels not any different than a soda or a candy machine. If you see one of these things, just don't use them right now," Fowler said.
CBS News reached out to Bitcoin of America for comment on the indictment. The company did not respond, and the CEO has also not responded to requests for comment. Bitcoin of America's website has also been shut down.
Before the indictment of Meraban, the company claimed in court that they had given Samuels' money to a third party whose identity remains unknown. A judge ordered that Samuels' money be handed over to Bitcoin of America. However, now that the company is facing legal issues, Samuels' family is considering suing Bitcoin of America to recover their lost funds.
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