A bill aimed at helping prevent
bitcoin scams by adding new regulations to “crypto kiosks” has moved one
step closer to becoming law. 

Arizona has seen an increase in the
number of people getting scammed via cryptocurrency, so much so that
Attorney General Kris Mayes issued a letter of support to the Yavapai County Sheriff’s Office last November in its efforts to crack down on this type of fraud. 

The scam involves the use of “crypto
kiosks” that can be found at some businesses or malls, which allow a
person to convert cash into Bitcoin or other cryptocurrencies. Scammers
often pretend to be a loved one, a government agency or gain a person’s
trust in some other way before asking them to deposit a large sum of
money into one of these cryptocurrency ATMs. 

Last year, YCSO and the AG issued
letters asking business owners in Yavapai County to put warnings on the
machines similar to those displayed around gift cards at stores due to the proliferation of a similar type of scam in which victims purchase gift cards and send them to scammers. 

House Bill 2387
by Rep. David Marshall, R-Snowflake, would add regulations to these
kiosks, as well as warnings to consumers, in an attempt to prevent scams
from continuing to proliferate. 

“There have been people who have
driven down from the mountain where we live to get to these ATMs, and by
the time they get back home, their money is gone,” Marshall told the
Senate Committee on Judiciary and Elections Wednesday. 

Marshall said he “dabbles” in
cryptocurrency himself, but does so knowing that you have to be careful
in or else you could be easily defrauded. 

In 2023, Americans lost $5.6 billion
in cryptocurrency related scams, with the majority of victims being the
elderly, a trend that was echoed by those who spoke in favor of the
bill in committee. 

Brendon Blake, the associate state
director of advocacy for AARP, told the committee that Arizona ranks No.
6 in the nation for the amount of money lost to fraud. Peoria Police
Deputy Chief Douglas Steele told the committee that only an estimated
40% of cases are actually ever reported to law enforcement. 

Marshall’s bill would require the
operator of the kiosks to provide warnings to consumers before they can
do a transaction and give users information about how to identify
cryptocurrency fraud. The bill also requires the kiosks to give physical
receipts that would include all the information needed to be given to
law enforcement in the event the person believes they did engage in a
fraudulent transaction. 

And it would limit the amount of
money a new account can deposit or send within a 72-hour period. That’s
because the scam often sees people creating new accounts and depositing
large amounts of money to scammers in repeated transactions. 

The bill further allows “a relevant
government authority” to request evidence of an operator’s “blockchain
analytics” and requires operators to maintain a written anti-fraud
policy that conforms to federal anti-money laundering laws. 

The Attorney General’s Office told
the Arizona Mirror that it worked with Marshall on the legislation and
hopes Congress takes action at the federal level so that it does not
just fall to the states to regulate the fraud. 

Crypto heists have become a growing concern, with North Korean hackers recently making the largest haul of $1.5 billion in cryptocurrency. But other types of scams involving artificial intelligence are also seeing large sums of cash being stolen. Last year scammers using deep fakes convinced finance workers to send them $25 million. 

AI has been used to clone loved ones’ voices in order to get people to send them money via these kiosks, the AG’s Office said. 

“There needs to be more done to
educate people of all ages because anyone can be victims of these
scams,” Richie Taylor, a spokesman for Mayes, told the Mirror. 

Making sure you have a possible safe
word or key phrase with loved ones in case you get a phone call that
feels “off” can help you avoid a scammer hoping to prey on your
emotions, Taylor said. 

There is no one type of scam technique, as the scammers are using styles such as romance scams, investment scams and others to lure people in, so the AG’s Office suggested that people try to educate themselves on how these types of scams work. 

If you or a loved one feel you may
have become the victim of a scam the AG suggests you go to your local
law enforcement agency, but you can also file a report with the AG or
the FBI. 

Lawmakers on Wednesday wondered if
there was more they could do, and Marshall said he mulled even banning
the kiosks outright in the state. Taylor said their office is “open to
something more stringent,” but said it is critical that federal action
be taken. 

“I wish it was a little more broad,”
Sen. Analise Ortiz, D-Maryvale, said when voting yes on the bill, adding
that these scams are “really atrocious.” 

The bill passed unanimously out of
committee heads next to the full Senate for consideration. If it passes
the Senate, it will return to the House of Representatives for a final
vote before it can go to Gov. Katie Hobbs.