Rising Cryptocurrency ATM Fraud in Hawaii
In Hawaii, there’s an alarming increase in cryptocurrency ATM fraud, posing a significant risk, particularly for seniors, as the holiday season approaches.
Cary Lopez, the AARP State Director, referred to this scam as an “epidemic” during a briefing held on December 3 by the House Consumer Protection and Commerce Committee.
Lopez informed legislators that in 2024, there were 68 reported fraud incidents statewide involving virtual currency kiosks—machines that function like traditional ATMs but facilitate the sale of Bitcoin and other cryptocurrencies. Out of these, 19 cases occurred on Hawaii Island, leading to a staggering loss of $922,022.
She noted that actual losses might be even more significant due to underreporting, explaining that many victims are hesitant to disclose their experiences with fraud.
“The complaints have nearly doubled in just one year,” Lopez pointed out. “It’s concerning to think about what might occur if no action is taken.”
Mana Moriarty, deputy director of the state Department of Consumer Affairs, shared that the agency conducted a recent survey and discovered around 250 virtual currency ATM machines operating across Hawaii.
“This indicates a rapidly growing presence of these ATMs in the state,” Moriarty added.
The kiosks are run by companies like CoinFlip, Bitcoin Depot, and Athena Bitcoin, allowing users to exchange cash for cryptocurrencies. Typically found in businesses that rent space for the machines, users deposit cash, which is then converted to cryptocurrency in their accounts. Transaction fees are charged by the ATM operators.
Lopez explained, “Scammers often impersonate bank employees, telling potential victims their accounts are compromised and at risk of being depleted.” She proposed an amendment to enable victims, particularly older individuals, to securely transfer their savings electronically to a Bitcoin ATM via a mobile app.
“I’ve heard stories where a staff member, perhaps unaware of the situation, saw an elderly person using the machine and offered them a seat while they completed the transaction. They likely didn’t realize it was a scam,” she added.
Lieutenant Rio Amon Wilkins from the East Hawaii Criminal Investigation Division told the Hawaii Tribune-Herald that scams like these tend to target older adults frequently.
“It seems victims are instructed to visit a specific location for code machines, following detailed instructions over the phone,” Wilkins continued. “There was an incident a few months back at a grocery store in Hilo, where a victim deposited a significant amount of money, and a family member witnessed the event and alerted the police, allowing for the recovery of the funds.”
Wilkins noted that the victim nearly deposited over $1,000 before law enforcement intervened.
Unfortunately, recovering funds in such cases is rare, as fraud incidents often go unreported and scammers are difficult to track, especially if they are overseas.
Lopez mentioned that AARP is collaborating with lawmakers to create legislation to put limits on the amount deposited through these machines. He suggested implementing daily transaction caps, offering refunds for fraud, ensuring live customer support during business hours, providing paper receipts, disclosing fees, and establishing a direct contact line for law enforcement.
A bill from last Congress, House Bill 1277, introduced by Representatives from Oahu and Hilo, passed the House but ultimately stalled in the Senate.
Rep. Scott Matayoshi, a co-signer of the bill and chairman of the House Commerce and Consumer Protection Committee, stated in a December 3 press conference that the initial deposit limit was reduced from $2,000 to $1,000 per transaction.
“Next year, we’re planning to propose legislation that will eliminate such transactions altogether. You wouldn’t be able to purchase cryptocurrency or money at these ATMs,” Matayoshi asserted. “If you already possess virtual currency, you can still withdraw it, but no new purchases will be allowed at these locations.”
He noted that scammers can disguise their identities by using local numbers or mimicking official bank contact numbers. “It’s essential to verify with your bank directly,” he advised.
John Turk from CoinFlip contended that the scrutiny on crypto ATM fraud may be unwarranted, as data reveals that only a small fraction of cryptocurrency fraud incidents occur at these kiosks.
“Less than 3% of funds lost to crypto fraud were connected to these kiosks,” Turk remarked, suggesting that a majority of fraud cases are tied to other platforms.
Joely Chan, a senior vice president at First Hawaiian Bank, emphasized that legitimate financial institutions never ask for sensitive information via unsolicited communication. She urged people to report suspicious calls by contacting official bank numbers instead of responding to emails or unknown phone numbers.
Wilkins added, “If you receive a call urging you to deposit money and you have any doubts about the caller’s identity, do not proceed without verifying first.”
