Delaware Attorney General Warns Delawareans not to Fall for Bitcoin ATM scams
January 9, 2025/
Bitcoin ATMs are playing a bigger role in cryptocurrency scams than ever before, as reported by the Delaware Department of Justice’s Investor Protection Unit. According to the Federal Trade Commission, consumers reported over $110 million in losses to scams involving Bitcoin ATM machines in 2023, a 1000% increase since 2020. A Bitcoin ATM (also known as Crypto ATMs or Crypto Kiosks) is an electronic ATM-like kiosk designed to facilitate the purchase of cryptocurrencies using any financial transaction card, including a debit card. These machines look like traditional ATMs and are often located in gas stations, convenience stores, malls, and other high-traffic areas.
Additional Information from the Delaware AG’s Office:
How do they work?
Bitcoin ATMs prompt you to deposit money into the ATM and either provide the address of an electronic wallet or create one on the spot. When someone puts money into a Bitcoin ATM, the ATM converts the money to cryptocurrency and deposits it into the wallet. These “ATMs” typically charge the user a substantial fee to convert the money into cryptocurrency and transfer it to the electronic wallet.
Using Crypto ATMs to facilitate scams
While these machines can provide convenient access to digital currencies, Bitcoin ATMs are increasingly being used as key players in crypto scams.
“The scams start through chats, social media, emails, texts, pop-ups and phone calls from strangers,” warned AG Jennings. “Scammers create some urgent justification for you to take cash out of your bank accounts and put it into a Bitcoin ATM. Often, the scammers fabricate an investment that promises great returns with limited risk. If it sounds too good to be true, it is.”
Victims are often directed by scammers to input an electronic wallet address, or are given a QR code to scan which in turn links to the scammer’s electronic wallet address. The Bitcoin ATM then transfers the crypto to the scammer’s electronic wallet. Once in their control, the scammers quickly move the crypto, making it very difficult to trace and recover.
How to Protect Yourself
DOJ’s Investor Protection Unit recommends taking these steps to protect yourself from Bitcoin ATM scams:
-
Never click on links from unknown parties or respond directly to unexpected calls, messages, or computer pop-ups. If you think an unexpected text or message could be legitimate, contact the company or agency that purports to have sent it, but look up their number or website yourself. Don’t use the phone number or link the caller or message gave you.
-
Slow down. Scammers want to rush you, so stop and check out the opportunity they are pitching. Before you do anything else, talk with someone you trust.
-
Never withdraw cash in response to an unexpected call or message. Only scammers will tell you to do that.
-
Don’t believe anyone who says you need to use a Bitcoin ATM to protect your money, to fix a problem, or to get in a great investment. No legitimate business or government agency will use such pressure tactics or require you to use virtual currency.
-
Be cautious if someone tells you something is a secret or information cannot be shared with anyone. This is a red flag because it isolates individuals from trusted resources.
Remember, most Bitcoin ATMs:
-
DO NOT limit daily transaction amounts — so there’s no limit to how much you can lose in a day;
-
DO charge high transaction fees that can eat up a substantial portion of the money you deposit;
-
DO NOT collect or verify the holder of the electronic wallet or the identity of the person to whom you send crypto;
-
DO NOT require a pause or have a resting period before effectuating a transaction — so your assets are transferred away immediately;
-
ARE NOT registered with a government regulatory body — so government agencies have a hard time providing help;
-
DO NOT have any fraud prevention or reimbursement policy; and
-
DO NOT provide details about the transaction and where assets are being sent on the receipts.
If you believe that you have been defrauded using a Bitcoin ATM, report it to the Investor Protection Unit at 302-577-8424 or Investor.Protection@delaware.
