FBI Warns Criminals Target Bitcoin ATMs

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Amid the surge in interest and profitability of cryptocurrencies over the past year, criminals are now heavily targeting Bitcoin ATMs across the country.

According to Coin ATM Radar, there are over 27,000 of these machines in operation. Most are located in convenience stores and are owned by private companies. There were just over 4,200 bitcoin ATMs last January. As more of these ATMs continue to roll out, law enforcement officials have warned the public should be prepared for even more criminals targeting the machines.

“The FBI has seen an increase in the number of crooks asking victims to use physical cryptocurrency ATMs and digital QR codes to complete payment transactions,” the FBI said in a statement.

“Criminal actors, in various fraudulent schemes, maliciously exploit cryptocurrency vending machines and QR codes to receive payments from victims. These schemes include online identity theft schemes (the scammer mistakenly identifies himself as a familiar entity such as the government, law enforcement, law firm, or utility company), romance schemes (the con artist establishes an online relationship with a victim creating a false sense of intimacy and addiction) and lottery schemes (a con artist falsely convinces a victim that he has won a prize and therefore asks the victim to pay lottery fees), ”the statement read.

The FBI added that regardless of the type of scheme, “the methods using cryptocurrency ATMs and QR codes seem similar. The scammer often demands payment from the victim and may order them to withdraw money from their financial accounts, such as investment or retirement accounts. The crooks provide a QR code associated with the scammer’s cryptocurrency wallet which the victim can use during the transaction. The scammer then directs the victim to a physical cryptocurrency ATM to insert their money, purchase cryptocurrency, and use the provided QR code to automatically fill in the recipient’s address.

Difficult to follow

Law enforcement officials recently told CNBC that ATMs are used for a wide range of criminal activities, including those of drug traffickers and money launderers. However, tracking down and eventually arresting these criminals has proven difficult.

“The decentralized nature of cryptocurrency creates challenges that make it difficult to recover,” the FBI said. “Once a victim makes the payment, the recipient instantly owns the cryptocurrency and often immediately transfers the funds to an overseas account.”

“This differs from traditional bank transfers or bank transfers where a payment transaction can sit on hold for one to two days before settlement. It can also make it difficult for law enforcement to collect funds and can leave many victims with financial loss, ”he added.

A study by Chainalysis found that nearly 75% of all illicit funds coming out of ATMs ended up being used in fraud stores, which are dark web sites that sell stolen credit card information.

Ethen Kim Lieser is a Washington state-based science and technology writer who has held positions at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow him or contact him on LinkedIn.

Image: Reuters.

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