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.

Jer­ic­ka Duncan

Jer­ic­ka Dun­can is a nation­al cor­re­spon­dent based in New York City and the anchor for Sun­day’s edi­tion of the “CBS Week­end News.”