SAN FRANCISCO (KGO) — Bitcoin ATM machines that convert cash into cryptocurrency have become the favorite tool of scammers, many operating from overseas. The I-Team has been working with ABC News on this investigation.

It’s the same old scams with a new twist. You’ve heard of people being drawn into a phony romance or being convinced there’s a problem with their computer or bank account – all a ruse to get their money. But now, the bad guys are convincing victims to feed their life savings into these Bitcoin ATMs.

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San Jose’s Jim Meduri got a phone call early one morning from someone who sounded like his son, crying that he had been arrested for a DUI accident involving a pregnant woman.

“It was a male voice,” said Meduri. “I mean, anybody that is emotional and their voice starts cracking, obviously it changes the voice a little bit, but it was close enough to let me think it was my son.”

He told Meduri to contact a defense attorney, who said the bail was $15,000. The attorney’s supposed staff directed him to pay the court through a Bitcoin ATM at a nearby bakery.

Meduri told the I-Team, “I went in there and we put, my wife and I put money into this ATM, you know, $100 bill at a time, you know? That was basically what it took.”

Meduri had placed the money into a Bitcoin account or “wallet” as it’s called, straight to the scammers; he didn’t know that at the time. Then, the lawyer and his staff went silent, so Meduri tried his son’s cell phone and when his son answered, he knew it was all a scam.

Meduri’s next call was to the Santa Clara County DA’s Fraud Unit, where attorney Erin West worked.

“The thing about cryptocurrency is it’s on a blockchain, which is a ledger,” West said. “We can see every transaction that happens. So, when we were able to see where he sent his money, we were able to send them an email that day and get them to freeze it until we sent a warrant, and then we were able to get that money back for him.”

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Getting money back in these cases is extremely rare, according to West. She has started a nonprofit called “Shamrock” to investigate and expose the worldwide scams that are now using these Bitcoin ATMs. West has traveled to Southeast Asia several times to see massive compounds built with scam money, to house human trafficked workers who target American victims.

On the scene, Meduri said, “It’s more than 35 buildings and was designed and built for the sole purpose of scamming.”

“Their primary industries in Cambodia prior to this were tourism and garments,” she added. “Today, their primary industry is scamming. It makes up more than half of their GDP and they’re coming for us.”

Case in point: police in Brooklyn Park, Minnesota stopped an 82-year-old woman who was about to send $27,000 to scammers. They convinced the victim her computer had been hacked so she had to send the money through a Bitcoin ATM.

The woman told police, “And she says you gotta get $27,000 out of your savings and set up a dummy account and then we’ll put cancel on something so they can’t get it.”

Last month, the DC attorney general sued Athena Bitcoin, one of the largest Bitcoin ATM purveyors in the country; they have locations in the Bay Area. The complaint includes screen captures of victims with their grey hair and phones to the ear as they take directions from the scammers. The lawsuit claims:

• At least 93% of the transactions on Athena’s devices in the District “are the product of outright fraud”
• “The median age of victims was 71 years old”
• The median loss per transaction — $8,000.

Athena forcefully denied those allegations in a statement to ABC News, asserting in part that it maintains “strong safeguards against fraud including transparent instructions, prominent warnings and consumer education.” They continue, “Just as a bank isn’t held responsible if someone willingly sends funds to someone else, Athena does not control users’ decisions.”

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The I-Team spoke with ATM Industry Association Executive Director David Tente and wanted to know if there’s a serious problem with Bitcoin ATMs.

“No, I wouldn’t say there’s a serious problem, and I think the data, supports that,” said Tente.

Tente says the rate of Bitcoin ATM fraud is slightly less than credit card fraud, and that we shouldn’t blame the technology. “We can’t control human behavior with mechanical devices to a great extent. A lot of the scams that are going on have been around for decades and just using a different method of payment.”

The FBI says scams perpetrated using Bitcoin ATMs cost Americans nearly $250 million in 2024, more than double the previous year. AARP is warning its 38 million members that Bitcoin ATMs are becoming the preferred method for criminals.

Amy Nofziger, Director of AARP Fraud Watch Network, said, “We want them to have similar consumer protections like every other financial instrument out there. Daily transition limits, so maybe a new customer can only put $1,000 into it.”

Here’s a simple way to protect yourself – you have to understand that only scammers demand payment in cryptocurrency. It’s that simple.

You can find more information about the dangers of Bitcoin ATMs here:

https://consumer.ftc.gov/articles/what-know-about-cryptocurrency-scams

https://operationshamrock.org/

Take a look at more stories and videos by the ABC7 News I-Team.