Bitcoin Depot Lawsuit Claims Crypto ATM Operator Enables Widespread Scams

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A proposed class action lawsuit alleges that Bitcoin Depot enables scammers to steal massive sums from consumers through its cryptocurrency ATMs while failing to implement meaningful safeguards to prevent fraudulent transactions.

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The 43-page complaint contends that Bitcoin Depot has unfairly profited from fees generated by scam-related transactions conducted through its network of over 8,400 cryptocurrency ATMs across the United States, Canada and Puerto Rico, despite allegedly knowing that the kiosks are routinely exploited by criminals targeting vulnerable groups, including the elderly and those unfamiliar with crypto technology.

According to the lawsuit, Bitcoin Depot’s ATMs allow users to convert cash seamlessly into Bitcoin and transfer it to digital wallets, often with little delay or verification required. The suit claims the company has failed to implement adequate anti-fraud protections, arguing that it prioritizes transaction volume and the fees it pockets off every transaction over consumer safety.

The lawsuit describes cryptocurrency ATM scams as a “nationwide epidemic,” citing Federal Trade Commission data showing that fraud losses tied to Bitcoin ATMs have skyrocketed in recent years.

Per the filing, scammers frequently impersonate government officials, customer service representatives or financial institutions to coerce victims into depositing cash under the guise of protecting their savings or assisting in an investigation.

Related Reading: Bitcoin Depot Lawsuit Claims Elderly Consumers Regularly Targeted by Crypto ATM Scams at Circle K Stores

The lawsuit claims that Bitcoin Depot has long been aware of apparent fraud issues, given the numerous consumer complaints and its own Securities and Exchange Commission filings, in which the company acknowledged that its services could be used to facilitate illegal activity, including fraud and scams.

The complaint contends that despite this alleged knowledge, Bitcoin Depot has refused to implement stronger safeguards, such as mandatory identity verifications for large deposits, transaction limits for first-time users, real-time customer service calls for suspicious activity or temporary holding periods as the legitimacy of a transaction is confirmed.

The suit says that instead, the company relies primarily on “superficial warnings” displayed on ATM screens—messages that are easy to bypass prompting users to consider whether they are being scammed, according to the case.

“Bitcoin Depot's refusal to implement adequate safeguards is driven by economic considerations,” the filing states. “The company understands that effective protective measures would reduce transaction volume and the substantial fees it derives from each completed transaction, regardless of legitimacy.”

The plaintiffs, a retired couple, claim they lost approximately $76,000 after scammers posing as Norton customer service and FBI agents convinced them that their identities had been compromised and associated with criminal behavior and that they needed to move their money into a supposedly protected Bitcoin account.

According to the complaint, the plaintiffs were told to make several large cash deposits over multiple days while remaining on the phone with the scammers, who allegedly instructed them not to tell anyone about the transfer.

The lawsuit points out that although the plaintiffs displayed multiple “unmistakable signs” of fraud as first-time users making unusually large deposits while visibly under telephone direction, Bitcoin Depot still processed each transaction.

The case notes that once the scam was unveiled, Bitcoin Depot only refunded the plaintiffs $2,000 for the supposedly “irreversible” transfers, even though the company allegedly retained transaction fees from the deposits that totaled more than the refunded amount.

“[Bitcoin Depot] has no lawful right to possess funds obtained through fraud, regardless of whether those funds were voluntarily deposited by victims acting under duress and deception,” the filing concludes.

The Bitcoin Depot class action lawsuit seeks to represent all individuals who, since May 11, 2020, completed a cash-to-Bitcoin transfer at an Idaho-based Bitcoin Depot ATM as part of a scam, and who either reported the fraudulent transaction to the company, law enforcement or a government agency or made the transaction under circumstances that demonstrated to the company the fraudulent nature of the transaction.

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