In a significant development, D.C. Attorney General Brian Schwalb has initiated legal action against Athena Bitcoin, a company that operates cryptocurrency ATMs, in response to a troubling surge of scams that primarily target older adults. This lawsuit follows the alarming case of an individual losing nearly $100,000 within a week due to fraudulent transactions conducted through Athena’s machines.
The Office of the Attorney General (OAG) has reported that a staggering 93% of deposits made at the seven Athena Bitcoin ATMs in D.C. were linked to scams, with victims experiencing an average loss of about $8,000 per transaction. An internal OAG investigation revealed that the company has profited from undisclosed fees that can reach as high as 26%, resulting in millions of dollars in questionable earnings.
Assistant Attorney General Jason Jones highlighted the common tactics employed by scammers during these illicit operations. Typically, victims receive a phone call from impersonators posing as bank or government officials, who create a sense of urgency by claiming that immediate action is required to protect their funds. “The scammer generally wants to keep you on the phone… and just keep the pressure building,” Jones noted, describing how the psychological manipulation can lead victims to act irrationally.
One of the primary issues with Bitcoin ATMs, Jones explained, is the lack of an intermediary. Unlike transactions through traditional banking systems, which may offer safeguards against fraud, money deposited into a cryptocurrency wallet is transferred directly to the scammer, making recovery virtually impossible. “It’s just too attractive,” Jones remarked, pointing to the seamless nature of cryptocurrency transactions for fraudsters.
To combat these scams, the OAG emphasizes the importance of communication. Jones urges individuals to inform their loved ones about the prevalence of such fraudulent schemes. “No legitimate company is ever going to ask you to put money into one of these crypto ATMs… If someone asks you to do that, they are trying to scam you,” he advised.
The lawsuit stems from a five-month investigation that reportedly uncovered Athena’s knowledge of its machines being exploited for scams and its ineffectiveness in implementing appropriate fraud warnings. Schwalb condemned Athena’s practices, stating, “Athena’s bitcoin machines have become a tool for criminals intent on exploiting elderly and vulnerable District residents.” He asserts that the company knowingly allowed the misuse of its ATMs while profiting from hidden transaction fees.
Bitcoin ATMs enable users to purchase cryptocurrency with cash and transfer it to digital wallets. However, in many cases highlighted by the OAG, scammers directed victims to send funds directly into accounts they controlled, instantly leaving individuals without access to their money. The legal action alleges violations of consumer protection and elder abuse laws, citing Athena’s failure to adequately address these scams, charge excessive hidden fees, and deny refunds outright.
According to the company’s records, nearly half of all deposits during Athena’s initial five months in D.C. were flagged as potentially fraudulent. The lawsuit also claims that Athena failed to disclose its “Transaction Service Margin,” which far exceeds standard industry exchange rates, and engaged in practices that obstruct victims from seeking restitution for their losses.
Elderly individuals, who may have limited familiarity with cryptocurrency, are often the targets of these scams, with the median age of affected victims being a concerning 71 years. As incidents of financial exploitation among older adults remain largely underreported, authorities are encouraging residents to come forward if they suspect such abuse.
Residents seeking help or wishing to report suspected scams can contact adult protective services, D.C. Police, or reach out to the OAG’s Civil Rights and Elder Justice Section. Additionally, consumers can file complaints regarding unfair business practices through the OAG’s website or hotline.
