Colorado Cryptocurrency ATM Scams on the Rise

When someone claiming to be from the U.S. Department of the Treasury told William Walters in a phone call last year that his identity had been stolen and used to commit felonies, the Colorado Springs-area resident was terrified.

The criminal—who used a real government official’s name and a Washington, D.C. phone number—told Walters, 73, that to protect his money, he needed to withdraw cash from his bank account and deposit it into a cryptocurrency kiosk at a nearby convenience store.

“You are so scared, and you’re so brainwashed ... that you feel that you trust this guy,” says Walters, who had $121,400 stolen in the scam.

Criminals are increasingly using cryptocurrency kiosks — often called crypto ATMs — as their preferred method of money transfer because the transactions are extremely difficult for law enforcement to trace. The machines allow customers to convert cash to Bitcoin and other digital currencies.

In unincorporated El Paso County, reports of fraud using crypto ATMs increased from one case in 2019 to 48 in 2024, with losses totaling $1.5 million last year, says Detective Marissa Williams, a financial crimes investigator for the El Paso County Sheriff’s Office who worked on Walters’ case.

In most such cases, scammers — often initiating crimes from overseas — are never brought to justice and losses are not recovered, Williams notes.

Pushing for regulations

Nationwide, fraud losses through crypto ATMs jumped nearly tenfold from 2020 to 2023 and surpassed $65 million in the first half of last year, Federal Trade Commission data shows. Officials say the actual numbers are likely higher because many losses go unreported. In the first six months of 2024, people age 60-plus were more than three times as likely as younger adults to report a loss using one of the machines, according to the FTC.

Many crimes start with phone calls, emails, texts or social media messages. Criminals pose as representatives of financial institutions, well-known retail companies or government agencies. They claim a person’s money is at risk or that they face arrest for an unpaid fine and can only rectify the situation by depositing money into a crypto kiosk.

In another Colorado case last year, Herb West, who also lives in the Colorado Springs area, received a pop-up alert on his computer warning that his bank account had been compromised. He called the phone number listed, thinking he was contacting his credit union.

“When it all started out, it sounded relatively legitimate,” West says. He, too, was told to make a deposit at a crypto ATM, and he did so. But he soon realized it was a scam and called the authorities. The 71-year-old lost $14,900.

Walters and West believe more needs to be done to help protect unsuspecting residents from criminals.

“Crypto ATMs are very loosely regulated by the federal government, and there is no regulation in the state of Colorado,” says Sgt. Ross Young, who oversees property crime investigations in unincorporated Mesa County.

Young worked with state Sen. Janice Rich (R-Grand Junction) on legislation to regulate crypto ATMs, which she introduced in January.

The bill would set a $1,000 daily transaction limit for new customers. It would also require disclosures about the risks associated with crypto kiosks, electronic receipts and a full refund of a customer’s first transaction if it is fraudulent and involves a virtual currency wallet or exchange located outside of the United States. The measure is currently pending in the General Assembly and could undergo changes. Go to aarp.org/co for updates.

Other states have enacted similar legislation. Vermont has a $1,000 daily cash transaction limit. In Minnesota, new cryptocurrency ATM users can get refunds for fraud losses that are reported within 14 days, and daily transactions are capped at $2,000 for new customers.

Getting educated

AARP and other groups are fighting back against crypto scams and other types of fraud by educating Coloradans on how they can help protect themselves.

A survey conducted late last year by AARP ElderWatch, which is a collaboration between AARP and Colorado’s Office of the Attorney General to fight elder financial exploitation, found that 78 percent of older residents are concerned about rising incidents of fraud. But many aren’t taking readily available prevention steps, such as checking their credit report or freezing their credit with the three credit bureaus, says Mark Fetterhoff, program manager for AARP ElderWatch.

ElderWatch will hold educational events this year about how to review credit reports, set credit freezes and take other actions to help prevent fraud. To learn about upcoming events, go to aarp.org/money/scams-fraud/elderwatch.

Also find resources at stopfraudcolorado.gov and aarp.org/fraudwatchnetwork.

Cynthia Pasquale is a freelance writer and former editor at The Denver Post. She has written for the Bulletin since 2011.

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