In January, Jim Meduri answered a terrifying call from someone pretending to be his son. The caller said they’d been in a car accident, and Meduri was convinced his son had been arrested for DUI and injuring a pregnant woman and her daughter. Meduri then spoke to people impersonating a defense attorney and a courthouse clerk who informed him his son could be sent away due to a monkeypox outbreak in the jail. Panicked, Meduri agreed to send bail money through cryptocurrency and put $15,000 into a Bitcoin ATM. After he realized he’d been scammed, his money was gone.
This is just one example of how scammers are using Bitcoin ATMs to swindle victims out of thousands of dollars, according to law enforcement. Bitcoin ATMs are located in convenience stores, gas stations, and bakeries and provide an easy way to buy cryptocurrency quickly with cash. In response, California has passed Senate Bill 401, limiting cryptocurrency ATM transactions to $1,000 per day per person and capping fees at $5 or 15%.
Since 2021, more than 46,000 people have reported losing over $1 billion in crypto to scams, according to the Federal Trade Commission. Scammers use different tactics to trick people, like creating a false sense of urgency and befriending or seducing their victims through social media or dating apps.
Santa Clara County Deputy District Attorney Erin West has been able to recover $2.5 million for scam victims like Meduri by tracking down cryptocurrency exchanges involved in the transaction. Some cooperation from exchanges is needed, as West noted that it’s rare for cryptocurrency victims to get their money back if it travels overseas.
Bitcoin ATM operators typically need to register with the U.S Department of Treasury’s Financial Crimes Enforcement Network, or FinCEN, and maintain an anti-money-laundering program. A Yorba Linda man pleaded guilty to operating unlicensed Bitcoin ATMs and failing to maintain an anti-money laundering program in 2020, though it can be difficult for consumers to tell how seriously the industry is taking the
