MADISON, Wis. — Wisconsin Democrats are proposing new regulations for cryptocurrency ATMs aimed at preventing fraud.
Cryptocurrency fraud is surging in popularity, and fraud prevention experts say crypto ATMs, specifically, have become a favorite tool of scammers. The machines aren’t regulated in the same way as banking ATMs, and victims aren’t protected by insurance.
“There’s no recovery, so that’s what makes these really, really difficult,” Scott Reeder, a loss prevention manager at UW Credit Union, said. “You can do police reports, but it’s just a dead end. There’s so much of this going on that there’s no resources to even look into recovering these funds.”
Victims lost almost $247 million last year to scams involving cryptocurrency ATMs, according to the FBI. The same report shows that the number of complaints the FBI received related to cryptocurrency ATMS nearly doubled in 2024.
READ ALSO: Oconomowoc police warn crypto scams on the rise after retired woman loses savings
“Five years ago, we hardly ever heard about these, and it’s been a constant incline since, and it’s getting more and more prevalent,” Reeder said.
Amy, who lives in West Allis and did not want to reveal her last name due to concerns about privacy, said she recently lost $850 to a scam using a cryptocurrency ATM.
Watch: State lawmakers take aim at cryptocurrency ATM scams
Lawmakers look to prevent cryptocurrency scams
She received a call from a man claiming to a be a police officer with a warrant for her arrest. The man said she had failed to appear in court. Amy believed her aging mother could have misplaced a summons.
“My mom has Alzheimer’s, and when he said the signature -- he couldn’t make out -- I thought it was my mom’s signature. So, I believed it right then and there,” she said.
She tried to investigate the claim further, “but every time I questioned him, he would say, ‘We don’t have to do this the civil way. I’m not stopping you. You can go downtown, turn yourself in,’” she said. “He was so convincing.”
The scammer provided her with false court paperwork and said she could clear up the situation by paying the fees she owed. To avoid being arrested, the man said, Amy should wire the money from a nearby cryptocurrency ATM.
“I knew nothing about Bitcoins,” Amy said. “I put the money in, and when I got back to the car, he proceeded to say he forgot something and wanted more money. And that’s when I snapped, and then he hung up the phone. And that’s when I knew I got scammed.”
State Rep. Ryan Spaude and Sen. Kelda Roys, both Democrats, are proposing a bill that would require cryptocurrency ATMs to warn users about fraud, cap deposits at $1,000 a day, and require ATM operators to refund customers who get scammed at their machines.
“If you do all of these things, the odds of a criminal using your device to defraud somebody come down to just about zero,” Spaude said.
“Cryptocurrency is here and actively being used — and we need to take steps to stop Wisconsinites from getting screwed,” Roys said.
Republicans control the Wisconsin Legislature, and without their support, the proposal will not become law. The sponsors are currently look for cosponsors and hope to see bipartisan support for regulations on cryptocurrency ATMs.
In the meantime, Reeder says to stop and think before sending money to someone you’ve never met before, especially if their demands are urgent.
“If something just doesn’t make sense, you know, slow down. Ask for advice. Ask your financial: ‘Hey, does this make sense?’” he said.
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