The 80-year-old was standing in a convenience store, pouring $60,000 into a cryptocurrency ATM machine. He wasn’t an investor. Someone called him pretending to be a representative from his bank. She scared him by saying she needed to convert her life savings into cryptocurrency to protect her funds. However, he knew nothing about cryptocurrencies or even how to convert cash into cryptocurrencies. The scammer explained what to do and where the nearest crypto machine was located at a convenience store near the apartment.
When the son received a notification from the bank that a large sum of money had been withdrawn, he frantically called the police for help. Police tracked the father as he stuffed $100 bills into the crypto machine, but only after he had already lost nearly $58,000. The criminal con artist was still on the phone, so when the officer spoke to her, she laughed. This victim will not receive justice and his life savings will be gone. he is not alone.
As the national dialogue on cryptocurrencies wanders around the merits and criticisms of the crypto market, we have witnessed an explosion of crypto machines in convenience stores and gas stations. The official name of these machines is “cryptocurrency kiosk operations,” but they are commonly known as Bitcoin ATMs or crypto ATMs.
These machines allow customers to exchange cash for cryptocurrencies. After making a purchase, customers can safely store their cryptocurrencies in their own digital “wallet” or, crucially, facilitate criminal activity, they can send their purchased cryptocurrencies to a third party’s “wallet.” Money travels around the world and is by design impossible to track once it’s sent.
Transaction fees are astronomical, ranging from 9% to 12%, with some fees reported to be as high as 20% of the transaction amount. Such high transaction costs undermine the argument that these are only for legitimate investment purposes. Very few people can make money with a product they start with a 10% to 20% reduction in transaction costs.
According to the police department, Sunrise has received 20 complaints of fraud or potential fraud this year alone, totaling more than $1 million in damages. Federal authorities received 11,000 complaints nationwide last year, costing victims a total of $250 million. There are an estimated 30,000 such machines nationwide. In Florida, 26 companies operate these cryptocurrency ATMs, with nearly 3,000 kiosks across the state. In Florida, total losses for victims since 2020 are estimated at between $16 million and $21 million.
Simple measures to protect the population are ineffective. In one case, law enforcement received a report of fraud and immediately seized a machine containing $10,000 of the victim’s money. The company that owned the machine filed a complaint with the police. Although there was no dispute that the victims had been defrauded, the cryptocurrency ATM company that owned the machines successfully argued that once money was placed in the machines, it was company property. The victim lost every penny. Warning signs have also proven ineffective.
Last year, the Florida Legislature proposed a bill to regulate these machines. A bill analysis of the bill specifically stated that the bill aims to reduce illegal and fraudulent activity by requiring these companies to register with the state and apply implementing regulations. Despite having bipartisan co-sponsors, the bill never even received a committee hearing in the Florida House of Representatives. The victimization and criminal activity continued.
In addition to victimizing seniors and communities, these machines can be used to facilitate other illegal activities, such as money laundering and the purchase of illegal services and goods.
The Florida Legislature is watching this happen and doing nothing to stop the continued harm in our communities and the fact that these machines are being used for illegal activities. Meanwhile, the companies that own these machines not only suffer, but also profit by serving as tools for illegal activities beyond the reach of law enforcement.
Local elected officials and local law enforcement must find solutions to protect our communities and combat criminal activity. Perhaps these machines should be completely banned. In the meantime, please warn those around you and be aware that these machines can be used as tools of crime.
Mike Ryan is the mayor of Sunrise.
