Residents of Massachusetts suffered significant financial losses in 2022, with reports indicating that at least $77 million was lost to scams involving Bitcoin ATMs. In response to these alarming figures, the state’s Attorney General, Andrea Joy Campbell, has initiated legal proceedings against Bitcoin Depot Inc. and its affiliate, Bitcoin Depot Operating LLC. The lawsuit accuses the company of allowing the facilitation of cryptocurrency scams, imposing excessive fees on customers, and failing to safeguard Massachusetts consumers.
The allegations suggest that Bitcoin Depot’s kiosks have been intertwined with scams resulting in over $10 million lost by local residents. This legal action follows a series of investigative reports which highlighted the concerning trend of scams associated with Bitcoin ATMs, bringing to light the sluggish response from state lawmakers.
One particularly troubling account involved 86-year-old Janice Peltz, who shared her experience of being deceived by a scammer impersonating her bank. The scammer kept her on the phone for hours, urging her to withdraw $18,000 in cash, which she subsequently deposited into a Bitcoin ATM. Peltz’s younger brother undertook a protracted struggle to recover the lost funds, ultimately securing a full $18,000 refund from Bitcoin Depot—an outcome that remains rare for many victims of such scams.
In many instances, victims are not as fortunate, with reports indicating that Bitcoin Depot frequently denies refund requests despite charging transaction fees that can reach up to 30%. Additionally, any refunds offered are often partial, compounding frustrations for those affected.
Attorney General Campbell is advocating for court measures that would limit Bitcoin Depot’s ability to process large transactions unless more robust anti-fraud measures are implemented. She is also demanding that the company provide refunds to consumers who have fallen victim to scams. In her statement, Campbell emphasized the need for Massachusetts consumers to feel secure in their financial transactions, regardless of the technology involved, and criticized Bitcoin Depot for prioritizing profit over consumer safety.
Meanwhile, a legislative proposal aimed at imposing daily transaction limits, ensuring refunds for fraud victims, and capping fees for all cryptocurrency kiosk operators has been stalled in the state legislature for nearly a year. This bill recently passed the finance committee but awaits further action.
In response to the lawsuit, Bitcoin Depot released a statement contesting the claims. The company argues that it does not facilitate scams or mislead customers and insists that it has established safeguards designed to protect consumers. Bitcoin Depot stated it is carefully reviewing the Attorney General’s complaint, reaffirming its commitment to ensuring customer safety and secure access to cryptocurrency services.
