Cryptocurrency ATMs have rapidly spread in recent years, but their use comes with significant risks. In particular, cases of fraud and security breaches have sharply increased in the U.S., making these ATMs a target for cybercriminals and scammers.
How do cryptocurrency ATMs work?
Cryptocurrency ATMs, often referred to as Bitcoin ATMs, allow users to convert cash into cryptocurrencies such as Bitcoin, Ethereum, or Litecoin, and vice versa. These machines are similar in design to traditional ATMs but offer a specialized interface for handling cryptocurrencies. Typically found in stores, gas stations, or other busy locations, they provide a quick way to buy cryptocurrencies without the need for an online exchange account.
Cyberattacks on crypto ATMs
Cryptocurrency ATMs are increasingly vulnerable to hacker attacks. Many of these machines operate with outdated software, making them susceptible to malware and other cyberattacks. Hackers can take control of the machine, manipulate transactions, and even steal private keys. For example, security researchers discovered a vulnerability in ATMs produced by Lamassu Industries, which allowed hackers to gain full control over the devices and steal user data, as reported by SecurityWeek in January. Although this flaw was fixed, the risk remains, as many machines continue to be inadequately secured.
Fraudulent transactions and scams
Bitcoin ATMs are an attractive target for scammers using various methods to deceive users and steal their money. One of the most common schemes is the “Impersonation Scam,” where criminals pose as government officials, police officers, or company representatives. They instruct victims to withdraw large amounts of cash and deposit it into a specific wallet via a Bitcoin ATM. In the U.S., losses from such scams totaled over $65 million in the first half of 2024, according to FTC data.
Security measures to prevent bitcoin ATM fraud
The rising use of Bitcoin ATMs has created a new opportunity for fraudsters. To protect themselves from these risks, cryptocurrency owners should take certain precautions. Alice Frei, head of security and compliance at blockchain communications and consulting firm Outset PR, emphasized in a CNBC article that verifying the legitimacy of a transaction, especially the recipient’s wallet, is crucial. She also stressed that users should reduce risk by using licensed ATMs from reputable operators.
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