BOSTON, Mass. – Massachusetts Attorney General Andrea Joy Campbell has filed a lawsuit against Bitcoin Depot, a major operator of cryptocurrency kiosks, alleging the company facilitated crypto scams and misled consumers. The suit, filed on , claims Bitcoin Depot knowingly overcharged customers and failed to adequately protect them from fraud, resulting in losses exceeding $10 million for Massachusetts residents.
The legal action centers on allegations that Bitcoin Depot actively enabled scams that preyed on vulnerable individuals. According to the Attorney General’s office, employees of Bitcoin Depot warned the company as early as 2023 that a vast majority of transactions conducted through its kiosks were linked to fraudulent activity. Despite these internal warnings, the company allegedly continued to operate without implementing sufficient safeguards.
The lawsuit specifically targets both Bitcoin Depot Inc. And Bitcoin Depot Operating LLC. The Attorney General is seeking a court order to compel Bitcoin Depot to halt acceptance of large transactions without enhanced fraud prevention measures and to provide restitution to consumers who were harmed by scams facilitated through its network of kiosks. The state is also alleging deceptive practices related to refund policies, claiming the company refused refunds to victims of these scams.
The scale of the problem extends beyond the $10 million directly linked to the Attorney General’s case. Data indicates that Massachusetts residents lost at least $77 million to Bitcoin ATM scams in the past year alone. While the state legislature has not yet enacted a ban on cryptocurrency kiosks or imposed statewide restrictions – mirroring the situation in states like Maine – this lawsuit represents a significant escalation in regulatory scrutiny.
The lawsuit highlights a common scam tactic involving criminals impersonating trusted entities – banks, government agencies, law enforcement, or even family members – to pressure victims into depositing cash into Bitcoin ATMs. Scammers typically instruct victims to deposit funds into a “Bitcoin wallet” under the guise of safeguarding their money, but the funds are then routed to an untraceable wallet controlled by the perpetrator. A recent case in South Carolina, brought by Parker Law Group, involved a 73-year-old widow who lost $30,000 to a similar scam facilitated through a Bitcoin Depot kiosk and Circle K convenience store.
The involvement of Circle K, as highlighted in the South Carolina lawsuit, suggests a broader pattern of retailers profiting from the operation of these kiosks despite the known risks. The Parker Law Group lawsuit alleges that both Bitcoin Depot and Circle K knowingly provide the means for criminals to defraud vulnerable individuals, particularly the elderly. The FTC reported that between January 2021 and June 2022, over 46,000 people reported falling victim to cryptocurrency scams, resulting in losses exceeding $1 billion.
Inside Bitcoin Depot, internal discussions regarding the prevalence of scams were reportedly ongoing. In early 2023, the company modified its website’s refund policy, stating that scam victims would be eligible for fee refunds on a “case-by-case basis.” However, the Attorney General’s lawsuit suggests this change was insufficient to address the systemic problem.
The legal challenge comes after reporting by WCVB’s 5 Investigates team, which highlighted the use of Bitcoin ATMs by scammers to extract cash from victims. The Attorney General’s office stated that the lawsuit is a direct response to this investigative reporting and a commitment to protecting Massachusetts consumers from financial exploitation.
The lawsuit against Bitcoin Depot underscores the growing regulatory pressure on the cryptocurrency industry and the increasing concerns surrounding the use of Bitcoin ATMs as conduits for illicit activity. As scams continue to evolve and exploit technological vulnerabilities, authorities are seeking to hold companies accountable for failing to protect consumers and prevent fraudulent transactions.