Security
Are bitcoin ATM operators ready to fight fraud?
Fraud is the biggest issue in the bitcoin ATM space, as localities and states propose regulations to combat it. Some bitcoin ATM operators are also beginning to combat fraud on their own.
October 21, 2025 by Bradley Cooper — Editor, ATM Marketplace & Food Truck Operator
Fraud is the biggest issue right now in the bitcoin ATM space. In 2024, the FBI reported that individuals lost $246.7 million to bitcoin ATM scams. Those numbers are likely much higher in reality, as many scams go unreported.
In many cases, scammers convince victims to deposit thousands of dollars into the machines to be sent to crypto wallets controlled by the scammers. Due to the nature of these cryptocurrency transactions, victims typically have no recourse or way to get their money back. In many cases, bitcoin ATM operators put scam warnings on the screens, but many in the state, local and federal level argue this isn't enough.
As a result, there has been a wide variety of proposed and enacted bitcoin ATM legislation on the local and state level, such as Illinois passing a law to limit transaction amounts for new users and requiring refunds for scam victims, or Spokane, Washington banning the machines altogether.
Some have argued that bitcoin ATM operators profit from these scams. In fact, several former employees of Canadian bitcoin ATM operators have stated they believe the industry is propped up by fraud.
Marc Grens, co-founder and president of Digital Mint, said in a CBC report that "to do the right thing is not profitable in this industry."
In fact, Brian L. Schwalb, attorney general for Washington, D.C.,filed a lawsuit against bitcoin operator Athena Bitcoin Inc. for financial exploitation. In the suit, he argues that 93% of all deposits made on Athena Bitcoin ATMs were fraudulent and that the operator failed both to prevent the scams or disclose its fees to victims.
However, some in the industry are taking steps to actively combat fraud and to fix this reputational issue. For example, Bitcoin Depot, which controls 9,170 machines and is the largest operator in the worldwide market, introduced a series of fraud protection measures and is now requiring ID verification at bitcoin ATMs.
To learn more about this initiative, ATM Marketplace reached out to a spokesperson for Bitcoin Depot.
Q. How will the ID compliance process work? Do customers have to provide a picture of their photo IDs? Scan it on the device? Or some other method?
A: All customers will be required, at a minimum, to scan their ID at the Bitcoin Depot kiosk.
Q; What are the extra senior protections put in place mentioned in the release?
A:Our enhanced safeguards for older adults are designed to help identify patterns or behaviors that are commonly associated with scams targeting seniors. When certain indicators are triggered, our customer support and compliance teams engage directly with the customer to gather additional information and determine whether the customer is likely a victim of a scam. These enhancements build on our existing protections and strengthen the measures already in place.
Q: How will these measures help combat fraud?
A:These measures strengthen our ability to identify and prevent fraudulent activity before it occurs. By collecting and verifying identification for all consumers prior to completing their first transaction, we can better ensure the identity of each user. It also serves as a deterrent to bad actors who attempt to access our platform.
Combined with our existing protections, like the use of blockchain analytics, transaction monitoring, and anti-money laundering compliance programs, we can use this data point to more consistently prevent fraudulent transactions from happening.
Q: One issue with the industry is that not all operators are on board with these anti fraud measures. What would you say to operators who have yet to put these standards in place?
A:Our focus is on providing industry-leading compliance protections to our customers and raising the bar for the industry. We view these additional measures as an opportunity to strengthen consumer confidence and the reputation of our industry. Beyond that, we are working hand-in-hand with policymakers around the nation to craft rules that would both protect consumers while also allowing this critical on-ramp to the cryptoeconomy to thrive.
About Bradley Cooper
