These aren’t your parents’ ATMs – they’re a new tool increasingly exploited by scammers.
Similar in appearance to traditional ATMs found in convenience stores, laundromats and liquor stores, Bitcoin ATMs allow users to purchase cryptocurrency with cash and transfer it to their digital wallets.
First on the scene in 2013, the number of these kiosks in the United States has surged from approximately 1,200 at the end of 2017 to more than 32,000 today.
There are over 100 in Rhode Island.
And the stories of people falling victim to scams where the machines play a big role have grown in kind.
In May, the police in Lakeville, Mass., received a report about a 73-year-old woman who had withdrawn $20,000 from her bank account and was unresponsive to her family’s calls. She had been misled into believing her computer was infected with a virus and that the only solution was to deposit the money into a Bitcoin ATM, following instructions to ignore any phone calls.
The Raynham Police Department intervened before any money was sent, but many others have not been so fortunate.
In Rhode Island, victims lost $10 million to cryptocurrency scams in 2023, according to the FBI. Last year, the Woonsocket Police Department reported that scammers had stolen about $100,000 from residents in just a few weeks.
A common script has emerged. Callers adopt an urgent tone, claiming that legal charges have been or will soon be filed against the victim. They may threaten to seize property, freeze bank accounts, or arrest the individual unless they resolve the issue with “settlement” funds.
This year, Rhode Island became one of a dozen states to enact laws designed to combat these crimes, mandating customer refunds for fraudulent transactions if the victim is classified as a “new customer,” defined as someone making their first crypto ATM transaction at the kiosk within the past 30 days. Operators must provide a detailed paper receipt for all transactions and live customer service Monday through Friday. Additionally, each crypto ATM operator must register with the R.I. Department of Business Regulation as a “money transmitter.”
Rep. Julie A. Casimiro, D-North Kingstown, one of the sponsors of the legislation, initially tried to cap all transactions at $1,000 per customer. However, the legislation was later modified to increase that limit to $2,000 per day for new customers and $5,000 per day for existing customers.
Much like the technology on which they are based, the scams have been proliferating exponentially.
Last July, the FBI said it had received 17,367 reports of government impersonation fraud in 2024, resulting in losses of $405.6 million. About 11,000 of these complaints and more than $250 million were related to crypto ATM frauds – a 99% increase from the previous year.
According to the Federal Trade Commission, individuals over the age of 60 are three times more likely to be defrauded compared with younger adults.
One of the most active organizations advocating for the law is AARP Rhode Island, where State Director Catherine Taylor said in a statement in support of the regulations on crypto ATMs that these scams often target retirement savings, which “should remain where they belong, not in a criminal’s digital wallet.”
“We cannot simply educate our way out of the fraud epidemic this country is facing,” she said.
But David N. Tente, executive director of the ATM Industry Association for the USA and Americas, says Rhode Island’s law goes far enough, calling it “a bit more reasonable” than those passed in other states such as Illinois and California, which kept the $1,000 daily transaction limit.
“These [scams] are not new,” Tente said. “The same scams have been around for decades, just using a different means of payment.”
In committee testimony in February, representatives of Coinflip, a Chicago-based digital currency platform that has been operational in Rhode Island since 2021 and holds a money transmitter license from DBR, said its customers must confirm that they were not directed by a third party to make a payment and that they are using a digital wallet they own and control, understanding that all transactions are final and irreversible.
Larry Lipka, Coinflip general counsel, argued that a $1,000 transaction limit encourages customers to stack transactions across multiple kiosks, potentially undermining anti-money laundering efforts. Additionally, being forced to refund victims results in a double loss for operators: the virtual currency they purchased and the cash deposited into the kiosk, Lipka said.
Ethan McClelland, director of government relations for Bitcoin Depot, warned that daily transaction limits and fee caps could even force them out of business in Rhode Island.
Tente cautions that more protective measures could have unintended consequences.
“Such efforts to protect potential victims from their own naivety punish others,” he said.
For every new law, there are criminals thinking up ways around it, Casimiro says.
“I see this as consumer protection,” Casimiro said. “If we need to go further, then we will.”
