By: Patrick Woodall
Sometime after the shutdown dust settles, the Senate is expected to consider legislation to give a congressional seal of approval to cryptocurrency despite the widespread fraud and risks to everyday people and the financial system. None of the bills discussed so far confront the huge fraud and money laundering threat posed by crypto kiosks — often called Bitcoin ATMs. These crypto kiosk operators make a killing through high fees and don’t appear to care that many of their so-called customers are really scam victims. A recent CNN story with a nifty infographics reported that at least $118,000 was collected from scam victims at a single Arizona crypto kiosk over the course of a year. But those in Congress pushing for crypto-industry friendly regulations have so far failed to address this source of mounting crypto crimes.
Ripoff Kiosks Target Black, Latine, and Low-Income Neighborhoods
Most crypto kiosks only really allow you to purchase cryptocurrencies with cash. Unlike real ATMs, most of them don’t let you sell crypto and withdraw your money. There may be as many as 45,000 of these kiosks nationwide found mostly in gas stations, liquor stores, convenience stores, and other high traffic locations. The fees to buy crypto through a kiosk are outrageously high. A Federal Reserve Bank of Kansas City paper that called the kiosk business a “controversial industry” that is associated with “illegal or financially predatory practices” estimates people pay at least 20 percent fees. This means in order to buy $5,000 worth of Bitcoin, a customer could pay $6,000 — $1,000 dollars in fees goes to the kiosk operator.
Kiosk operators target Black, Latine, and lower-income neighborhoods, following the same playbook as payday lenders, check cashers, pawn shops, and other financial predators. A Bloomberg investigation found that crypto kiosks were disproportionately placed in Black and Latine neighborhoods where customers paid steep fees to buy (but were unable to cash out) cryptocurrencies. The pattern of these crypto kiosks racial and economic targeting can be quite stark, as mapped by University of Missouri-Kansas City professor Jocelyn Evans.
Scammers and Money Launderers Love Crypto Kiosks
Ripoff artists frequently entice their victims into depositing tons of cash into crypto kiosks. The federal Financial Crimes Enforcement Network recently issued an alert about people getting defrauded of nearly $250 million at crypto kiosks last year and that they are frequently used to launder illicit earnings from narcotics trafficking. The scams using crypto kiosks vary, but often the professional scam artists pretend to be tech support, law enforcement, or bank representatives who tell their unsuspecting victims they must deposit cash into crypto kiosks to salvage their account security, help authorities catch criminals, or pay off imaginary fines. Older people are frequently the target of these scams since they typically have built up a lifetime of savings and are less technologically savvy.
Crypto kiosks turn out to be the perfect getaway vehicle. The transactions are fast and non-reversable and sophisticated criminals can easily hide their ill-gotten gains and whisk them out of the country. That is why the Federal Trade Commission calls crypto kiosks “a payment portal for scammers.” Local police and state legislators have raised alarm over crypto kiosks in Arizona, Delaware, Florida, Illinois, Indiana, Maine, Maryland, Minnesota, Missouri, Nevada, North Carolina, Pennsylvania, and Virginia and many others.
Terrifying Stories of Older People Losing Their Savings at Crypto Kiosks
The schemes these swindlers use can be quite elaborate and quite threatening, often involving multiple actors pretending to be police, bank officials, or tech support. Sometimes they say that the victim’s hacked account or computer was used to facilitate narcotics or human trafficking crimes. They promise to get the victim out of this imaginary jam if they tell no one and quickly deposit money in crypto kiosks.
A 74-year old New Jersey retiree was defrauded of $25,000 after she was contacted by a purported Apple representative who said her computer and bank accounts had been hacked and instructed her to deposit her entire bank balance into a crypto kiosk at her local gas station.
An Arizona woman lost more than $200,000 from a scam that started with a pop-up alert on her computer and led her through a maze of phone calls and impersonations and over a dozen kiosk deposits.
A 66-year old retiree from Hilton Head, South Carolina lost $7,500 after she was called by someone who pretended to be a county sheriff who alleged she owed fines for skipping jury duty. She put $50 and $100 bills into a crypto kiosk while the imposter was on the phone with her but hesitated when he demanded $3,000 more — she called the real sheriff directly who told her had been ripped off. Local law enforcement estimated that county residents lost $3 million to crypto kiosk frauds in 2024.
Crypto Bills Ignore Kiosk Fraud
Right now, the main thing standing between you and massive crypto kiosk frauds are conscientious gas station attendants and convenience store clerks. That. Is. Pathetic.
Congress could do better. But among the many flaws of the crypto industry’s deregulatory legislative blitz is that not one of the major industry-backed crypto bills has addressed crypto kiosks at all. This is a $250 million and growing problem that Congress just will not seriously confront.
Several states have passed laws protecting consumers from these abuses and placing restrictions on how these crypto kiosks operate. Senator Dick Durbin (D-IL) has incorporated some of these important crypto kiosk safeguards into legislation that would require them to prominently post the risks of fraud on their machines, limit the size of deposits, fully disclose the details of the transactions on receipts, and more. The best solution would be to ban crypto kiosks, but incorporating Senator Durbin’s kiosk bill into any crypto legislation would help protect people from this vehicle for rampant crypto fraud.
There are many more crypto fraud risks to investors and to the financial system. No crypto legislation should be advanced that does not protect people and the economy from crypto’s many risks and must build on the laws on the books that already protect investors and consumers.
The crypto industry is demanding that Congress deliver a bill that provides almost no oversight or safeguards for people, markets, or the economy. Congress should not bow to the crypto industry’s demands but should deliver real, meaningful protections for the public and the economy that treats crypto like the rest of the financial industry it is clamoring to join.