DC Attorney General Sues Crypto ATM Operator Athena Bitcoin

The DC Attorney General’s Office has taken legal action against Athena Bitcoin, a crypto ATM company, alleging that it failed to implement adequate anti-fraud measures. This comes after the company reportedly charged private fees for deposits while being aware that a significant portion was linked to fraudulent activities.

DC Attorney General Brian Schwarb announced on Monday that around 93% of Athena’s deposits during the initial five months were directly tied to fraud. He criticized the company’s retransmission policy, which allegedly makes it difficult for victims to recover their lost funds and expenses.

“Athena is aware that its machines are often exploited by fraudsters, yet it chooses to ignore this reality, reaping benefits from hidden transaction fees,” said Schwarb.

This lawsuit is part of a wider crackdown on crypto ATMs, with the FBI reporting approximately 11,000 fraud complaints from kiosks in 2024, resulting in losses exceeding $246 million. At least 13 states, including Arizona, Colorado, and Michigan, are implementing restrictions to address concerns about crypto ATM fraud.

Athena has not responded to requests for comment.

Allegations of Profit from Hidden Fees

According to court documents, Athena charged consumer fees as high as 26% per transaction, without making those fees clear at any point. The legal claims suggest that the company misled users by using the term “Trade Service Margin” in its Terms of Service, which never explicitly mentions “fees.”

Athena is accused of engaging in deceptive trade practices and violating laws designed to protect vulnerable and elderly individuals from financial exploitation.

Reportedly, Athena profited from hundreds of thousands of dollars in fees from fraud victims, many of whom were elderly. The median age of these victims was 71, with average losses of around $8,000 per transaction, amounting to nearly $98,000 from incidents linked to its kiosks.

Schwarb’s office claims that Athena’s oversight was inadequate, enabling a “pipeline for unchecked international fraud transactions.”

“Athena gained from victims who were confused, manipulated, and ultimately defrauded while using its machines,” he noted.

Advice to Avoid Fraud with Crypto ATMs

To defend against what Schwarb describes as “predatory behavior,” users of crypto ATMs should avoid sending money to unfamiliar individuals, especially those contacted randomly.

Often, these scammers present themselves as technical support, claiming that funds might be at risk or promising large returns with minimal or no risk.

People should be cautious when approached randomly and verify any claims through official channels.

Currently, the U.S. has about 26,850 crypto ATMs. Bitcoin Depot holds the largest market share at 27.6%, followed by Coinflip and Athena at 13.6% and 13%, respectively.

Issues with Fee Disclosure in the Banking Sector

The failure to transparently disclose fees is not a new issue; it has been prevalent in the banking industry as well, according to the DC Attorney General.

The Federal Deposit Insurance Corporation recently mandated a bank to repay around $1.2 billion in overcharged fees. Wells Fargo faced a $3.7 billion fine for imposing illegal fees and interest on mortgages, while Bank of America was ordered to pay over $250 million in 2023 for charging “junk fees.”