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

As a researcher with a background in financial crimes and digital assets, I find myself increasingly alarmed by the growing use of crypto ATMs in illicit activities. With over $30 million flowing through these machines to known scam addresses last year alone, it’s clear that we are dealing with a significant problem that requires immediate attention.

As a researcher, since 2019, I’ve discovered that the cash-to-cryptocurrency sector, predominantly driven by crypto ATMs, has handled at least $160 million in suspicious transactions, based on a study conducted by blockchain analytics firm TRM Labs.

As a researcher, I’ve recently come across an intriguing finding: A recent report published on Wednesday underscores the apprehensions shared by law enforcement agencies globally regarding the escalating adoption of crypto ATMs. These machines, which convert traditional fiat currency into digital assets, have been a conduit for a significant proportion of illicit activities in 2023. Specifically, about 79% of all illegal cash-to-crypto transactions, amounting to over $30 million, were directed towards identified fraudulent addresses through these services.

Recently, Crypto Automated Teller Machines (ATMs) have been under scrutiny once more, as Germany’s financial regulator, BaFin, confiscated approximately 250,000 euros ($280,000) in cash from 13 such machines during a raid. This action is part of a growing pattern, with instances like the U.K. shutting down 26 Bitcoin ATMs and U.S. authorities seizing 18 in Texas, as well as over 50 Bitcoin ATMs belonging to Bitcoin of America in Ohio.

According to the report, criminal elements are turning towards cryptocurrencies for quicker international transfers, but cryptocurrency Automated Teller Machines (ATMs) may have extra risks for money laundering because they involve cash transactions and don’t require face-to-face interaction or account verification.

Last year, approximately 13% of the 15,000 reports of digital asset fraud resulting in $1 billion in losses were related to Bitcoin Automated Teller Machines (ATMs), which affected individuals aged 60 and above.

According to the report, approximately 1,000 devices have been taken offline in the U.S. due to regulatory measures since May. Despite this, the U.S. still has the highest number of these machines globally, with over 31,000 of them currently operational.

As a crypto investor, I’ve noticed an exciting development down under: Australia, with its 17-fold increase in crypto ATMs over just two years, might be on track to secure the third spot among global markets for these machines. However, authorities have flagged these kiosks as potential weak points in combating money laundering, a concern outlined in recent reports.