A tragedy was avoided by the narrowest of margins in Gillette last week when a 76-year-old man was trying to deposit $16,000 into a Bitcoin Teller Machine (BTM) at a convenience store called Common Cents.
A fellow customer, a woman in her 30s, happened to overhear the scam in progress.
As is common, the con artist had kept the gentleman on the phone to explain how to operate the BTM as well as prevent the man from overthinking the crisis the scammer himself had invented.
The woman called the Gillette Police Department, which responded and explained to the man that he was being taken in the nick of time, saving his retirement funds. That money went straight back into his account, where it hopefully still sits, all safe and sound.
It was a happy ending that time. But the endings to these types of stories are all too often not so happy, AARP Wyoming Associate State Director for Advocacy and Communications Tom Lacock told Cowboy State Daily.
In Cheyenne alone, the police department confirmed with Cowboy State Daily that it has identified 50 instances of fraud involving BTMs, totaling more than $645,000 in cold hard cash that wasn’t rescued.
Instead, it went down the equivalent of a black hole, never to return again.
Cheyenne’s not the only community getting hard hit by this type of scam, Lacock said. It’s happening in communities across Wyoming, wherever cryptocurrency kiosks have appeared.
“This is happening to a lot more people than anyone wants to admit,” he said. “These folks who are running the scams and sending folks to crypto ATMs are professionals from overseas. And they understand how to get you in a very emotional state very quickly.”
That has AARP proposing a suite of new regulations for cryptocurrency kiosks, to try and help stem a rising tide of Wyoming citizen’s money that’s flowing overseas and swelling the bank accounts of criminals, who use the money for all sorts of nefarious purposes, including organized crime, terrorism, and human trafficking.
The FBI has estimated more than $9.3 billion was stolen nationwide in various types of cryptocurrency frauds in 2024 alone.
And a large proportion of those victims were senior citizens — thousands of them, many of whom lost retirement funds they’ve worked an entire lifetime to save.
That’s likely just a fraction of the real number, Lacock believes. Many people are just too embarrassed to report that they got taken.
Not Really An ATM
Kevin Paintmer, Wyoming regional president for ANB Bank, has seen his share of unfortunate scams involving BTM machines.
“In our case, it was a customer who told us they were getting cash to buy a car,” Paintmer said. ”And I think most of the banks now, especially with elderly people taking large amounts of money, we really ask a lot of questions about (that).”
This time was no different. Tellers asked the man if he knew the person he was giving his money to and tried to make sure he’d really thought this withdrawal through, since it was such a large sum. The man was certain of himself, however, and knew what he was doing. So, he withdrew a mid-five-digit dollar amount from the bank, then took it to a BTM in Cheyenne where he fed the money into the machine one $100 bill at a time.
The next day, the man came back. He’d come to realize that he’d been had. That no car was going to be delivered to him after all. And he wanted to know if there was any way he could get that money back.
The man was out of luck, Paintmer’s team had to tell him. Seconds after that money was transmitted, it spider-webbed out into so many different accounts, getting laundered and washed clean, that it would be impossible to find.
“I saw a presentation about a year ago at an ICBA (Independent Community Bankers of America) conference where … this forensic accountant showed how they tried to track some of these transactions,” Paintmer said. “And it was like this spiderweb chart.”
The money spread out on that spiderweb so fast and furious that the forensic accountant had to give up following it. Days later, it was still going, like some kind of perpetual infinity money-laundering machine.
While many refer to BTMs as an ATM for bitcoin, it’s a description Paintmer particularly dislikes.
“They’re not really an ATM because they only take money in,” he said. “And they’re not regulated.”
That makes them little more than portals to fraud, in his opinion, even if the owners didn’t set them up for that purpose.
That’s one of the reasons Paintmer believes the owners of the machines should have to make good on all fraudulent transactions, refunding them to their victims, so that they are motivated to detect fraud and prevent it.
“That will get (the owners) attention,” he said. “If I owned one of these machines, I’d make darn sure that I’ve got policies and procedures in place to ensure that the transactions are legitimate.”
Why BTMs Are The New Darlings Of The Scammers
While BTMs are legal right now, their lack of regulations has made them the new darlings of scammers, even if nothing has really changed about the nature of the scams themselves.
“These are the same old scams,” Lacock said. “It’s the IRS scam, it’s the romance scam, it’s the pig butchering that we’re seeing where people talk to you about having lunch that you’ve never heard of before, hoping it will start a conversation.”
BTMs are attractive to con artists because they’re more isolated than previous options. Bank tellers and retail stores where gift cards are sold have become wise to the many schemes and tend to warn their customers off.
But BTMs have no such helpful employees associated with them. People can come in and use the machines and leave, without having ever interacted with anyone who might have made them stop to think.
Lacock believes just a few simple regulations could be game-changing when it comes to preventing frauds involving BTMs.
Transaction limits, for example, of $1,000 a day, and no more than $10,000 in a single month’s time from a given individual would not just help limit the size of the damage. They also create time and space for a victim to think things through. The con artist will undoubtedly try to send the victim to kiosks belonging to different companies, to get around the individual transaction limit. But that just makes the situation that much weirder.
“What we have found, almost universally, is that when people have time to think, when people have time to get out of that emotional state, they have a second where they go, ‘You know what, this doesn’t sound right,’” Lacock said.
Some of the other regulations Lacock would like to see are requirements to use computer analytics to detect transactions that are likely fraudulent, as well as live customer service during operating hours.
The measures are going to be presented to the Wyoming Select Committee on Blockchain, Financial Technology and Digital Innovation on Sept. 23, Lacock said, which is already considering a bill that would require licenses for cryptocurrency kiosks like BTMs.
“We would just like to see them take it a little bit further than that,” Lacock said. “We do think requiring money transmitter status and compliance is important. That’s a good first step. But we just don’t see that there’s enough consumer protection there.”
Tough Road Ahead
Licensing cryptocurrency kiosks is something David Pope, an accountant in Wyoming who has been a prominent voice in legislative discussions about crypto assets, said he could get behind.
“I am generally in favor of licensing bitcoin ATMs and their owners other make sure the machine itself isn’t a scam,” he said. “I think I would have to see the actually required reporting before I could comment positively or negatively on (that).”
However, the bigger asks, like limits on transaction amounts and on BTM transaction fees, are something Pope questions. That suggests at least some of the changes AARP is seeking may have a tough road ahead.
“I don’t believe the fees should ever be limited,” Pope said. “We can, however, require adequate disclosure of what those fees are. If we limit the ability to set their own fees, then it limits the operator from being able to pay for all of the regulatory requirements that are being suggested.”
Requiring operators to refund fraudulent is another measure Pope questions.
“(That) should only be required of the operator if they participated in the inducement or performance of the fraud,” he said.
Preventing fraud with BTMs and other cryptocurrency kiosks is something that is part of a broader policy discussion, Pope added.
“Who shoulders the burden of making sure the transaction and the destination are legitimate?” He said. “Part of the Bitcoin allure is that it rests on individual responsibility. Do we attempt to regulate something that should be the responsibility of the consumer, and place that burden on the ATM operator?”
Renée Jean can be reached at renee@cowboystatedaily.com.
