Brenda Smith was unfamiliar with cryptocurrency ATMs until she was instructed to deposit over $12,000 in cash into two machines last year, falling victim to an elaborate online scam. The 76-year-old retiree from Calgary had recently experienced a stroke that affected her cognitive abilities.
Despite the machines resembling traditional bank ATMs, cryptocurrency ATMs allow customers to deposit cash and convert it into digital currency like Bitcoin, which can then be transferred to a virtual wallet globally. Smith, coerced into the fraudulent act, expressed regret and lamented the loss of her substantial sum.
Since the installation of the first crypto ATM in a Vancouver coffee shop in 2013, the number of these machines has grown significantly, with over 3,600 in Canada and 39,000 worldwide. Authorities have raised concerns over the misuse of these machines for illicit activities.
A CBC investigation uncovered that crypto ATMs are commonly used by fraudsters to exploit victims across Canada. These machines, operating legally, are identified as “Bitcoin Automated Teller Machines” by FINTRAC, Canada’s financial intelligence agency.
Despite the rise in fraudulent activities involving crypto ATMs, there is a lack of monitoring on the operators by FINTRAC. While these companies are required to adhere to anti-money laundering laws and report large transactions, there are no regulations on transaction fees or limits.
Reports from the Canadian Anti-Fraud Centre show that losses due to crypto ATM scams are on the rise, with victims reporting millions in losses. Law enforcement agencies like the RCMP and Toronto police are facing challenges investigating these crimes, with funds quickly leaving the country, making recovery difficult.
Canada leads globally in the number of crypto ATMs per capita, facilitating billions of dollars in transactions annually. However, experts highlight the ease and speed of transactions as factors attracting fraudsters to these machines.
The convenience, accessibility, and lack of stringent verification processes make crypto ATMs appealing to scammers, preying on vulnerable individuals who may not fully comprehend the risks involved. As investigations continue, efforts are being made to address the growing issue of fraud through these machines.