ATMs under fire: The dangers of Crypto ATMS

Did you know Crypto ATMs, although legal in Canada, have become the main source fraudsters use to get money from scam victims.

"They're so convincing, and unfortunately I was vulnerable.” This was the statement of Brenda Smith who was recently a victim of a cyber scam that began after she deposited more than $1200 cash into a cryptocurrency ATM. Smith unfortunately suffered a stroke which she claims impaired her cognitively.

If you aren’t familiar with cryptocurrency ATMs, they are physical kiosks, often resembling a traditional ATM, that allows users to convert cash into cryptocurrencies like Bitcoin to later sell crypto for cash. They don't connect to a bank account; instead, they transfer cryptocurrency to a digital wallet.

The first crypto ATM in Canada was installed in 2013 in a Vancouver café. At the time, the machine was seen as a pioneer for innovation by offering speedy, accessible ways to buy crypto. A little more than a decade later, there are about 3,600 crypto ATMs across Canada  and more than 39,000 worldwide. And authorities have growing concerns about how the machines are being used and by whom.

Bitcoin, which was birthed in 2009, isn’t controlled by any authority such as a central bank. Not too long ago, the currency has become infamous as a means to buy and sell illicit goods such as drugs on websites such as Silk Road, and has opened a new route for scammers to find victims.

CBC News conducted an investigation, speaking to many law enforcement agencies, financial regulators, cryptocurrency experts and former crypto ATM company employees for months. The investigation shed light that these machines have become the main tool fraudsters use to get money from scam victims all over the place. Canada's financial intelligence agency, FINTRAC, concluded in an analysis in February of 2023, of suspicious transactions reports submitted to the agency.

The report reads, "FINTRAC judges that Bitcoin Automated Teller Machines (BATMs) will continue to be the primary method that domestic and international criminal perpetrators of fraud will use to obtain funds from their victims and to launder those proceeds within the cryptocurrency ecosystem.

"It is highly likely that the number of Canadian victims targeted by organized fraud networks located in other countries will continue to rise. Criminal groups are developing innovative and sophisticated fraud campaigns to direct Canadians to place funds in BATMs."

To further highlight insult to injury, Major police services like the RCMP, OPP and Toronto police aren't tracking how much of the fraud reported to them involves the use of crypto ATMs.

The only national law enforcement group with these stats seems to be Canadian Anti-Fraud Centre (CAFC). A staggering $14.2 million has been lost to scams through crypto ATMs just last year, and currently,  this year’s number is likely to exceed that with more than $4.2 million reported in the first three months of 2025 alone.

But those numbers come with large caveats. It is estimated that only five to 10 per cent of fraud incidents are actually reported so the actual figure might be much higher.

The real questions lies within why crypto ATMs became such an appealing tool for fraudsters? We do have an idea.

Experts in the field explain the appeal hinges on some of the obvious; it allows for convenience and speed. In fact, people can send humanitarian aid and cross-border funds much faster and in larger amounts than in the past. The downfall is that now threat actors can perform malicious acts much faster than ever before.

Andreas Park, a finance professor at the University of Toronto and co-founder of its blockchain research lab, points to accessibility: the machines don't require customers to use a bank account and rarely use an authentication process other than a phone number for transactions under $1,000.

"The low barrier of using them and getting access to crypto assets is exactly what facilitates crime," Park said.

The combination of those factors and the lack of human interaction in the transaction is what makes the machines attractive to scammers, said Coffey (Who’s Coffey?), as well as a knowledge gap when it comes to victims.

"They're not evil themselves, but they're a tool used by fraudsters to facilitate fraud," the detective said of the crypto ATMs. "It's easy, it's fast, it's irreversible … and they really, really prey upon vulnerable communities who don't really understand what cryptocurrency is."

It’s apparent that we need to be doing better tracking of the problematic use of these kinds of machines/services. As well, developing broader policies to curb this kind of illicit use. Without appropriate policies and the data to back them up, scams like this will continue to prey on Canadians, especially those who are unfamiliar with these technologies and their very prevalent risks.

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