Angela Beltran Tech 03.06.2023 04:Mar AM EST

Bitcoin ATM Firm Allegedly Involved in Cryptocurreny Scams

Bitcoin ATMs have a history of being used as tools for fraud, and now reports say that a Bitcoin ATM firm themselves allegedly profited from the cryptocurrency scams being performed through unlicensed kiosks.

Bitcoin ATM Scam

Over 50 unlicensed Bitcoin kiosks were involved in the fraudulent activities in Ohio. After seizing the machines, the U.S. Secret Service's Cyber Fraud and Money Laundering Task Force investigated the incident.

This led to the indictment of three executives from S&P Solutions which operated as the Bank of America. The trio namely Sont Meraban (owner and founder), Reza Meraban (manager), and William Suriano (company attorney) were arrested last week.

A Cuyahoga County grand jury returned the indictment on March 1st, according to CoinTeegraph, and they are facing charges such as money laundering, conspiracy, and other crimes relating to the Bitcoin ATMs.

In addition to being arrested, there were also search warrants that made it possible for authorities to search their residences in Florida and Illinois.

Prosecuting attorney Andrew Rogalski mentioned that due to the lack of Anti-Money Laundering protections in the system, it was possible for fraudsters to transfer assets out of the users' crypto wallets, noting that the kiosks were "ready-made for scammers."

The way it works is that scammers would instruct their victims to deposit cash into the machine in exchange for BTC. They will claim that the digital asset will be placed in the victim's wallet, which they do not have access to from the beginning.

The company's alleged involvement led to the firm getting a 20% transfer fee for every instance it happened. They allowed it to happen despite knowing that the customers were being subjected to fraudulent activities.

Previous Cases

Other fraudulent transactions have already occurred using Bitcoin ATMs. Back in 2021, fraudsters would provide a QR code associated with their crypto wallet, which they will tell the victim to use for the transaction.

The scammer will then instruct their victim to deposit money into one of the physical cryptocurrency ATMs, purchase cryptocurrency, and use the QR code provided by the scammers. The money placed in the machine will then be transferred to the scammer's wallet.

The FBI has already seen an increase in scams involving crypto ATMs. This can be quite alarming since there are over 69,000 crypto ATMs in the US alone, which according to CNBC, was only 4,212 back in January 2020.

The operators of the crypto ATMs are required to register with the U.S. Treasury Department's Financial Crimes Enforcement Network, but the implementation for this requirement is not as strict, based on the investigation of the New Jersey commission.

There's also the fact that many of the crypto ATMs require no identifying information on purchases up to $900 worth of crypto. This could lead to many other crimes like money laundering since the transaction cannot be traced to anyone who makes them.