The machines going offline coincided with the introduction of the Crypto ATM Fraud Prevention Act by Illinois Senator Dick Durbin. The bill aims to curb fraud by implementing consumer warnings, deposit limits, and enhanced law enforcement tools. Meanwhile, the UK sentenced its first illegal crypto ATM operator, Olumide Osunkoya, to four years in prison for running unregistered machines and facilitating money laundering. These developments proved that there is still intense global regulatory scrutiny on the crypto ATM industry due to concerns over fraud and compliance.
Drop in Crypto ATMs Hits the United States
More than 1,200 cryptocurrency ATMs mysteriously went offline in the United States during the first weekend of March, which raised concerns about the future of the industry. The decline happened just days after Illinois Senator Dick Durbin introduced the Crypto ATM Fraud Prevention Act. Overall, the global Bitcoin ATM network experienced a net loss of 1,100 machines in early March, with the US accounting for the majority—1,233—of these closures.
Crypto ATMs are self-service machines that allow users to buy or sell cryptocurrencies, like Bitcoin, using cash, debit cards, or other payment methods. Unlike traditional ATMs, which connect to a bank, crypto ATMs link to cryptocurrency exchanges, enabling transactions between fiat currency and digital assets. Some machines support both buying and selling, while others only allow purchases. Unfortunately, due to their potential use in fraud and money laundering, crypto ATMs are subject to increasing regulation in many countries.
Crypto ATM number changes (Source: Crypto ATM Radar)
The sudden reduction in machines only slightly impacted the US’s dominance in the crypto ATM industry. On March 3, the United States was still the home to the world’s largest crypto ATM network, with 29,731 machines, which is about 79.9% of the global total. Canada follows with 3,085 ATMs, accounting for 8.3%, while Australia ranks third with 1,467 ATMs, representing 3.9%. Meanwhile, new installations in Europe, Canada, Spain, Poland, Australia, and Switzerland helped mitigate the overall decline.
The crypto ATM industry faced some serious challenges since mid-2022 due to increased regulatory scrutiny and enforcement actions against unregistered businesses. The stagnation in growth has been attributed to these evolving regulations, which have made it a lot more difficult for operators to expand.
While the exact reason for the recent ATM closures is still unclear, the timing of these developments proves that there is still many regulatory pressures on the industry.
New Bill Targets Crypto ATM Scams in the US
Illinois Senator Dick Durbin’s recently introduced new legislation is specifically aimed at reducing fraud at cryptocurrency ATMs across the United States. Speaking from the Senate floor on Feb. 25, Durbin shared the story of a constituent who was scammed out of $15,000 by a fraudster pretending to be law enforcement.
The scammer falsely claimed that there was a warrant for the man's arrest and instructed him to pay the supposed fine via a crypto ATM to avoid jail. Durbin described this as part of an alarming trend of fraud in the US’s more than 30,000 crypto ATMs, which primarily targets senior citizens.
The main goal of the Crypto ATM Fraud Prevention Act is to implement safeguards against these kinds of scams by requiring crypto ATM operators to warn consumers about potential fraud and take reasonable steps to prevent these crimes. The legislation will also introduce measures to minimize financial losses for victims and equip law enforcement with better tools to track and prosecute criminals. The proposed regulations also include a special protection period for first-time crypto ATM users, during which deposits will be limited to $2,000 per day or $10,000 in total. Additionally, any deposit exceeding $500 by a new customer will require verbal confirmation, and under specific circumstances, fraud victims could be eligible for a full refund.
While scams involving cryptocurrency ATMs have increased in recent years, they follow a familiar pattern that is used by criminals who have long exploited unsuspecting people through similar schemes, like threatening people with legal trouble and demanding payment via gift cards. According to the FBI, Americans lost more than $5 billion to crypto-related fraud in 2023, with a very large portion of victims being elderly.
2023 crypto related complaints (Source: FBI)
Durbin’s bill is among the first crypto-focused legislative proposals introduced in the 119th Congress, after competing efforts to regulate stablecoins in both the House and Senate. However, it is still uncertain whether the bill will be able to attract enough support to pass through the Republican-controlled Congress and ultimately be signed into law by President Donald Trump. So far, many major crypto ATM operators like CoinFlip and Bitcoin Depot have not made any comments about the new legislation.
UK Jails First Illegal Crypto ATM Operator
A UK court sentenced an illegal cryptocurrency ATM operator to four years in prison in the country’s first criminal case involving unregistered crypto activity. Olumide Osunkoya was found guilty of running a network of unauthorized crypto ATMs without regulatory approval, according to a statement from the Financial Conduct Authority (FCA) on Feb. 28.
The FCA charged Osunkoya on Sept. 10 for operating crypto ATMs without registration at 28 locations through his company, GidiPlus Ltd, between December of 2021 and March of 2022. His machines processed transactions worth 2.6 million British pounds ($3.14 million) before he tried to evade detection by transferring the ATMs from his company and continuing to operate up to 12 machines under a fake name and company. The FCA also found that he failed to prevent the machines from being used for money laundering.
Osunkoya pleaded guilty to five charges on Sept. 30, including forgery, after he was caught fabricating four bank statements to pass a source of wealth check at a crypto exchange. He was also found guilty of using a false identity to establish a company and possessing criminal property, which included 19,540 British pounds ($24,567) in cash obtained through his illicit operations.
Judge Gregory Perrins condemned his actions as deliberate and carefully planned, stating that his continued operation of illegal ATMs showed calculated defiance of the regulator. The case happened after a nationwide crackdown by the FCA and local law enforcement agencies, which in 2023 targeted illegal crypto ATMs across the UK. The regulator visited 38 locations and removed 30 machines, bringing the number of crypto ATMs listed on Coin ATM Radar from 80 in 2022 to zero this year.
The FCA also warned that consumers should be prepared to lose all their money if they choose to buy crypto. It also emphasized that the industry is still largely unregulated in the UK, making it a high-risk market for investors.
