With the golden age of scams in full swing, it is perhaps unsurprising that one of the largest Bitcoin automated teller machine (BTM) operators in the country is being sued for alleged complicity in pervasive international fraud—and it’s not the first time.
On Monday, Washington, D.C., Attorney General Brian Schwalb filed a lawsuit against Athena Bitcoin following a monthslong investigation into the company’s business practices. According to the lawsuit, Athena allegedly facilitated financial fraud, illegally profited from hidden fees, and refused to refund victims who were “scammed out of life-altering amounts of cash.” In total, 93 percent of all Athena BTM deposits in Washington, D.C., were linked to scams, the lawsuit estimates, and nearly half of the deposits “were flagged to Athena as the product of fraud.”
“Athena’s bitcoin machines have become a tool for criminals intent on exploiting elderly and vulnerable District residents,” Schwalb said in a statement. “Athena knows that its machines are being used primarily by scammers yet chooses to look the other way so that it can continue to pocket sizable hidden transaction fees.”
Through a spokesperson, Athena said it “strongly disagrees with the allegations” and “will defend itself in court.” The company also claimed it employs aggressive safety protocols, but the D.C. lawsuit alleges that these self-imposed safeguards are not only ineffective but harmful, arguing that “rapid prompts, wordy warnings, and long, complicated legal disclaimers … exacerbate the confusion and pressure that scammers create for their victims.”
Athena did not respond to additional requests for comment.
BTMS CONVERT CASH INTO CRYPTO, which can then be transferred to a digital wallet. The number of crypto bank machines nationwide has skyrocketed in recent years, and the U.S. has continued to dominate the global market, hosting over 80 percent of the world’s BTMs at the end of 2024. Critics and some regulators charge that these machines, which have established a growing presence in convenience stores, gas stations, and supermarkets, are becoming a primary conduit for impersonation scams that fleece retirees and residents of low-income neighborhoods (where many of these kiosks are clustered) out of their hard-earned savings.
According to data from the Federal Trade Commission (FTC), fraud losses involving these kiosks increased nearly tenfold to over $110 million between 2020 and 2023. During the first half of 2024, fraud losses surpassed $65 million, with elderly individuals accounting for 70 percent of that total. In addition, the FTC found that consumers over the age of 60 were “more than three times as likely as younger adults” to report losing money to BTM scams.
In November 2024, attorneys with DannLaw filed a class action lawsuit against Athena in the Superior Court of New Jersey. As part of the lawsuit, the attorneys sued chief executive officer Matias Goldenhörn directly, as well as the owners of convenience stores with Athena-operated BTM kiosks throughout the state.
BTMs attract financial fraud because they allow the victim to deposit money directly into the scammer’s crypto wallet.
“BTMs are specifically designed to appeal to criminals,” DannLaw founder and former Ohio Attorney General Marc Dann commented last year. “That’s why I consider them to be the AR-15s of the financial services industry.”
BTM operators are required to register as money service businesses with the Financial Crimes Enforcement Network (FinCEN) and renew their registrations every two years, but consumer protection rules and licensing are mostly left to the states. As a result, state-level oversight has varied markedly.
New York and Montana sit squarely on the opposite ends of this spectrum. In New York, BTM operators must obtain a costly and compliance-heavy BitLicense, but Montana does not have a money transmitter licensing law. Although these companies must secure a money transmitter license in other states, the rules governing their operations tend to be more permissive.
As Governing reported, nearly a dozen states have passed consumer protection laws this year forcing BTM operators to refund defrauded customers and comply with stringent transaction limits, while some localities have outright banned BTMs. At the federal level, legislation proposed by Sen. Dick Durbin (D-IL) seeks to enshrine stronger consumer protections for BTM customers, though the bill has stalled. Moreover, Sen. Durbin’s attempt to incorporate key elements of the proposal into the GENIUS Act was unsuccessful.
AT A TIME WHEN THE CORE FUNCTIONS of federal agencies tasked with safeguarding consumers appear to be crumbling, ordinary Americans have become more vulnerable to the types of scams that thrive in lightly regulated markets. One such scam is impersonation fraud.
Impersonation scammers typically pose as a trusted person or institution and, after establishing a sense of urgency, deceive victims into transferring large sums of money through hard-to-trace methods like BTMs. Throughout the process, scammers maintain a direct line of communication, either by keeping the victim on the phone or calling back repeatedly, and emphasize urgency to cloud the victim’s judgment.
BTMs attract financial fraud because they allow the victim to deposit money directly into the scammer’s crypto wallet. Once the transfer is completed, the money disappears without a trace. While it is possible for law enforcement agencies to determine what address the funds went into, “they can’t get the funds back and they can’t identify who it was that perpetrated the scam to begin with,” Benjamin Schiffrin, director of securities policy at Better Markets, told the Prospect.
The crypto bank machine business model enables operators to effectively share in the spoils of scams by design. Consider Athena’s “limited refund policy,” which caps gross profit refunds at $7,500. The lawsuit filed by Attorney General Schwalb contends the company does not disclose the policy “to elderly (and other) fraud victims at any point during or after the transaction, including when they report fraud and request a refund, that Athena retains a significant percentage of a victim’s losses as a transaction fee.”
In one instance cited in the lawsuit, one customer “was scammed into feeding $98,000 into an Athena BTM while paying almost $26,000 in undisclosed fees along the way.” Athena refunded the customer $7,500, representing just 30 percent of the incurred fee and less than 10 percent of the entire transaction value.
Critics like Marc Dann assert that the BTM provides an inviting tool for scammers. In an interview with the Prospect, Dann said crypto bank machines make it “much easier to defraud everyday people,” particularly due to the exorbitant fees BTM operators charge customers. “That’s what stunned me when we first started taking these cases on,” Dann told the Prospect.
Earlier this year, Iowa Attorney General Brenna Bird, a Republican, filed lawsuits against two other prominent BTM operators, Bitcoin Depot and CoinFlip, which reportedly charge fees of up to 23 percent and 21 percent, respectively. The lawsuits also allege both companies “profit directly from Iowa scam victims by imposing excessive, and often hidden, transaction fees,” and single out Bitcoin Depot for “deceiving Iowans about its refund policy.” Once again, most of the scam victims were over the age of 60.
A spokesperson for Bitcoin Depot said that the company “does not profit from scams. We are addressing these claims through the legal process and will demonstrate the strong measures we take to prevent scams and ensure a secure, transparent experience for all users.” Coinflip declined to comment.
As state attorneys general step up enforcement and states like Massachusetts consider legislation to designate crypto bank machine operators as money transmitters, the permissive regulatory environment and resulting oversight gaps continue to embolden BTM companies and third-party fraudsters alike. It is precisely for these reasons that AARP has backed a pair of bills introduced in the Massachusetts legislature to establish operational regulations and fraud prevention for BTMs. AARP has also supported similar proposals in other states.
Burgeoning efforts to enhance state-level consumer protections will likely clash with the approach BTM operators have pursued to keep their customers safe. As Schiffrin observed, self-regulation has long proven to be a recipe for disaster in most if not all markets, but crypto bank machine companies have insisted on doing just that.
“It’s understandable that the parties would want to regulate themselves, but that’s why it’s so important states and localities do so—especially in the absence of the federal government—and take meaningful action,” Schiffrin told the Prospect. “I think the states are realizing they have to actually pass laws to address this.”
This story has been updated with a comment from Bitcoin Depot.