Cash-to-Crypto Industry Dominated by ATMs Is a Law-Enforcement Concern: TRM Labs

Law enforcement authorities globally have concerns about the use of crypto ATMs in scams, a report by blockchain analytics firm TRM Labs found.

Last year, over $30 million went to known scam addresses through cash-to-crypto services.

Since 2019, the cash-to-crypto industry – which is dominated by crypto ATMs – has processed at least $160 million in illicit transactions, according to a study by blockchain analytics firm TRM Labs.

The report, released Wednesday, highlights why law enforcement authorities worldwide have concerns about the growing use of crypto ATMs, which take fiat currency and send crypto to the desired digital wallet. In 2023 alone, 79% of all illicit cash-to-crypto tranfers, over $30 million, went to known scam addresses through cash-to-crypto services.

Crypto ATMs were in the spotlight again earlier this month when Germany’s financial regulator, BaFin, seized 13 in a raid, confiscating cash amounting to almost 250,000 euros ($280,000). The report said such crackdowns are part of a “broader trend,” citing the 2023 examples of the U.K. shutting down 26 bitcoin ATMs and U.S. authorities seizing 18 in Texas and more than 50 Bitcoin of America ATMs in Ohio.

“While illicit actors look to cryptocurrencies to move funds faster cross-border, crypto ATMs face additional money laundering vulnerabilities due to the use of cash and lack of face-to-face communication or account open controls,” the report said.

Of the 15,000 complaints last year involving $1 billion in losses due to digital asset scams affecting people aged 60 and above, as many 2,000, some 13%, involved bitcoin ATMs.

The report said regulatory actions in the U.S. have forced over 1,000 machines offline since May, though the country remains home to more than 31,000 of them, the most in the world.

Australia, where the number of machines has grown 17-fold over two years, may have become the third-largest market for crypto ATMs. Authorities in the country have identified the kiosks as a money laundering vulnerability, the report said.

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