Bitcoin ATM Scams 101: How they work, the legal landscape, how the industry is fighting back

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Take a look at our deep dive into bitcoin ATM scams, the legal landscape, and how operators can respond.

July 25, 2025 by Bradley Cooper — Editor, ATM Marketplace & Food Truck Operator

Bitcoin ATMs are at a crossroads in many ways. This is due in no small part to the increase in scams. Bitcoin ATM scams are not only costing victims a lot of money, they are also harming the reputation of operators.

How much money have people lost from bitcoin ATM scams?

The data is quite compelling as to the impact of these scams. The most recent data from the Federal Trade Commission found that these scams led to $65 million in loses from the first half of 2024 alone. The FBI stated in a 2024 report that there were complaints of $246.7 million in losses from cryptocurrency. In 2023, that number was $114 million in total, a tenfold increase from 2020. This doesn’t account for the large numbers of unreported scams.

These scams are also occurring worldwide, asTasmania found that the biggest bitcoin ATM users were scam victims. The Australia Federal Police revealed that from Jan 1., 2024 to Jan. 1, 2025, reported losses exceeded more than $3 million.

How do bitcoin ATM scams work?

Scammers use similar tactics with this scam as they have in the past. They contact the victim via call, text or email in an attempt to trick the victim into sending them money.

The Department of Financial Protection & Innovation of California said they may be, “pretending to be from a legitimate organization, a romantic interest, or a distant relative.”

One popular technique is to pretend to be from a financial institution and say the user’s account has had a security issue and the customer needs to withdraw funds and deposit it in a safe location, such as a bitcoin ATM.

From there, the scammer will keep the victim on the phone, directing them on how to use the machine and coaching them to ignore any potential warnings the machine gives about scams or that all transactions are final. After depositing the money, the scammer will usually have the victim scan a QR code that links to their cryptocurrency wallets.

What makes bitcoin ATM scams different from other scams?

The biggest difference is that it’s much more difficult if not impossible for a victim to retrieve money from a bitcoin ATM once they have deposited it.

This is due to the nature of bitcoin itself. When a customer purchases bitcoin, the transaction is logged onto the blockchain which cannot be changed, altered or reversed. The bitcoin ATM operator will send the bitcoin from its wallets to the wallet identified by the user: in this case, the scammer’s wallet.

In some cases, local law enforcement have opened up a bitcoin ATM to retrieve the cash for the victim. This has led to significant legal battles between vendors and local law enforcement. In 2023 McLennan County, Texas, a sheriff opened up a bitcoin ATM to return $15,000 to a victim of a scam. In a similar case, in May 21, the Linn County, Iowa Sheriff’s department removed $14,100 from a bitcoin ATM, according to Iowa Appeals.com.

In both cases, the courts ruled against law enforcement as the operator had no idea that the funds were being deposited as part of a scam.

How are lawmakers responding to bitcoin ATM scams?

Different localities, states and countries have taken diverse approaches to the issue of bitcoin ATM scams.

On one extreme there are outright bans in some places. For example, Spokane Washington officially passed a ban on all crypto ATMs in June 2025, as did Stillwater, Minnesota in March 2025. The entire country of New Zealand did the same in July 2025.

In many cases, legislatures aren’t pursuing bans as much as ordinances and regulations.

As an example, Grosse Point Farms, Michigan passed an ordinance that requires crypto ATM operators to put fraud risk warnings nearby and to limit daily purchases at bitcoin ATMs to $1,000 with a $5,000 limit over 14 days. The town did this preemptively as there are no bitcoin ATMs in its official borders, although there are machines in nearby communities.

Nebraska puts that limit at $2,000 daily for new users, and those users can receive a full refund if they report the fraud within 90 days. Iowa has put a similar law in place, although the limit for refunds is shorter at 30 days.

Some state laws also put limits on the fee for bitcoin ATMs, such as in California, which says any transaction is either $5 or 15% of the total amount.

On the federal level, Sen. Dick Durbin of Illinois has called for limits to be placed on bitcoin transactions for new users and for full refunds for fraud victims.

“Nothing much has happened yet at the federal level, but it is coming. At the state level, about 2/3 of all the new and proposed ATM legislation we are tracking involves crypto in some fashion,” David Tente, CEO of the ATM Industry Association(ATMIA), said in an email interview. “It is still relatively new for most -which also means that the level of understanding for most is low – and that tends to generate some concern/anxiety.”

What can crypto ATM operators do to prevent scams?

There are a variety of methods bitcoin ATM operators can use to help combat scams.

“Operators should build in multiple layers of user education without making the experience overly complicated. That starts with clear, persistent scam warnings reminding customers never to send money to someone they don’t personally know or trust, and just like with a traditional ATM, never to deposit cash into an account that isn’t your own or trusted,” Scott Buchanan, COO of Bitcoin Depot, said in an email interview.

One method would be for the bitcoin ATM to trigger an alert when too much cash is inserted into the ATM at once or place daily limits for new users.

“It’s also crucial to provide live support via phone, text, chat, and email to help guide users through every step of the process. The goal should be to create guardrails that protect people without slowing down legitimate transactions. A well-designed interface can do both: discourage bad actors and keep the process fast and intuitive for everyone else,” Buchanan said.

Buchanan also added that operators can help during bitcoin scam incidents by providing data.

“We often provide law enforcement with valuable data based on our industry-leading blockchain analytics tools. We are registered with FinCEN and follow strict compliance protocols, including ID verification, transaction monitoring, and watchlist screening. We also operate on a non-custodial model and do not hold user funds. It’s our goal to expand access to cryptocurrency in a responsible way while continuing to strengthen protections and support for our users.”

Tente recommends that bitcoin ATM operators be proactive and contact local law enforcement about how bitcoin ATMs work.

“Before an operator even deploys their first terminal/kiosk, they should reach out to local law enforcement and educate them on how the crypto transaction process works — including who owns any deposited cash, which can vary location to location. Crypto deployers can also display our Warning poster — Six Typical Cryptocurrency Fraud Schemes. They might even make a habit of asking every user — ‘Is this your first time using a cryptocurrency ATM/kiosk,'” Tente said.

When it come to warnings on or around the machine, Tente believes shorter may be better.

“Some states have proposed the posting of volumes of information at the ATM that get to the point of being ridiculous. Particularly if someone is in the process of becoming a victim. The common response is often — scroll quickly to the bottom of the list and click on ‘Accept.’ It might be better to display a few short warnings that people are more likely to read,” Tente said.

Conclusion

Bitcoin ATM scams likely won’t go away anytime soon. However, common sense regulations that limit transactions for new users, along with safety guards put in place by operators can deter scammers.

While it is true that bitcoin ATM operators are not responsible for the actions of scammers, by putting in place proactive solutions, they can avoid potential PR fallout. It is also especially important that bitcoin ATM operators be proactive in working with local law enforcement and authorities both to inform them of the machines and of potential issues.

About Bradley Cooper

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ATM Industry Association (ATMIA)

The ATM Industry Association, founded in 1997, is a global non-profit trade association with over 10,500 members in 65 countries. The membership base covers the full range of this worldwide industry comprising over 2.2 million installed ATMs.

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