Federal, state scrutiny grows on crypto ATMs after $333M in scam losses

Americans have now lost over $333 million to crypto ATM scams, and the FBI says $240 million of that vanished just in the first six months of 2025, which is double what people lost in H1 2024.

Spokane Police Detective Tim Schwering has been dealing with this since 2023.“Cases started flowing my way where people were getting ripped off by cryptocurrency machines,” Tim said.

The money was always gone in minutes, and would allegedly end up in China, Russia, Nigeria, or some other country where no one could get it back. “You couldn’t get to anyone or get the money back,” he said. He watched people’s entire savings disappear.

Scams hit hard in local communities, seniors targeted first

Tim said one man lost $900,000 using a crypto ATM down the street. At least two others lost everything and then ended their lives. Most of them were older, lonely, or scared.

Scammers pretended to be lovers, government agents, or even IRS officers. They’d say someone was in trouble. Then they’d say the only way out was to deposit money ($40,000, maybe more) into a crypto ATM. That was it.

When Tim saw how bad it was getting, he started visiting nursing homes and local community centers. He’d explain how these scams work and try to stop people from falling for them. “My job is to try to protect people, and it’s very frustrating,” he said. The scammers were always far away. “So, we could at least change policy,” he added.

Spokane Councilman Paul Dillon picked it up from there. He tried for a state ban first. That didn’t go anywhere. “We wanted to see what levers we could pull locally,” Paul said. He pushed for a city-wide ban. “The compelling stories moved us into action,” he said. The council didn’t even argue. They passed it unanimously. The rule kicked in back in June, and shops were given a little time to get rid of the machines.

Crypto ATM bans expand beyond Spokane as fraud spreads

Spokane wasn’t the first. Stillwater, Minnesota had already passed a similar law. Paul said, “We’ve received no complaints about the removal.” Now he wants the state to try again next session, before the machines just start showing up in nearby towns.

Tim says a federal ban would be better, but Paul doesn’t think that’ll happen anytime soon under President Trump’s current crypto policies. Spokane’s too close to Idaho anyway, just a 20-minute drive away.

As long as states don’t act together, scammers can just move across borders. Meanwhile, other places like Arizona, Arkansas, Vermont, and St. Paul are looking at bans or tighter rules. And yes, a CNN report confirmed crypto ATMs are still popping up in Circle K stores across the U.S.

Some crypto people aren’t happy. Alex Davis, who runs a blockchain company called Mavryk, says removing the machines won’t stop fraud. “Eliminating them may reduce certain fraud vectors, but it also removes one of the last public-access tools for financial privacy and cash-to-crypto conversion,” he said.

Alex added that crypto ATMs still exist because regular banks don’t work for everyone. A lot of folks still use cash or have no bank access at all. Sure transaction fees are sky-high at 10 percent or more, but that’s the price they pay for fast, private access, said Alex.

Jared Strasser, who helps run The Crypto Company, said these machines mostly serve a small group now. He said they used to be one of the only ways into crypto back in the day. That’s changed, but some people still need them.

“That doesn’t eliminate the use case for others,” Jared said, “but it explains why these machines serve a narrower, more transactional audience.” They’re also perfect for scammers, because the money moves fast and can’t be undone.

Lawyers say crypto ATMs in America a bigger banking problem

Lev Breydo, a law professor at William & Mary, thinks the machines point to a deeper mess. “BTMs reflect the intersection of folks locked out of the mechanics of the financial system,” Lev said. He’s not wrong.

People who don’t trust banks or can’t use them go to crypto. The U.S. is one of the few countries that let crypto ATMs thrive legally. 80 percent of all crypto ATMs on the planet are in America. That’s not because of innovation. That’s because the system’s broken.

Lev said the U.S. let these machines plug into payday lenders, check-cashing shops, and money transmitters. They were never really integrated into banking, just bolted onto whatever was already there, which is why they’re everywhere.

Jared said all bitcoin ATMs in the U.S. have to follow KYC and AML rules, checking who’s using them and report anything shady under the Bank Secrecy Act. But of course scammers still find ways in.

Back in Spokane, Tim isn’t done. He still checks for crypto ATMs in local businesses. If he finds one, they get a citation. He said some victims still refuse to believe it’s a scam.

One woman kept sending money to a man she thought loved her, even after her family begged her to stop. Tim traced it all to Nigeria. A year later, she had sent him $250,000. “Some people will continue throwing good money after bad,” he said.

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