An elderly resident of Forest Lake fell victim to a scam, losing nearly $1 million after being persuaded to withdraw cash from his bank and deposit it into a cryptocurrency ATM. Another local reported a loss of $600,000 before recognizing the fraudulent scheme. Cryptocurrency ATMs, which can be found in places like gas stations, are increasingly being exploited by scammers who target unsuspecting victims, leaving them with little chance of recovering their lost funds.
“It’s heartbreaking. Victims often panic and lose their ability to think clearly,” remarked Det. Nathan Olstad from the Forest Lake Police Department. He emphasized that once cash is deposited into a cryptocurrency ATM, retrieving the funds becomes nearly impossible.
The Forest Lake City Council is set to deliberate on a new ordinance aimed at safeguarding residents from similar scams. The proposed legislation mandates that all cryptocurrency ATMs within the city must be registered. According to City Attorney Amanda Johnson, the city already requires registration for businesses that pose clear public health or safety risks, such as liquor stores and cannabis shops. Cryptocurrency ATMs should be treated similarly due to the significant fraud associated with these machines, the vulnerable individuals they often target, and the difficulty in recovering lost funds.
Understanding Cryptocurrency ATMs
Cryptocurrency ATMs, or kiosks, function like traditional ATMs but are specifically designed for cryptocurrency transactions. Users can either withdraw funds from their cryptocurrency wallets or purchase cryptocurrencies directly. Many individuals turn to cryptocurrency for various reasons, including faster payments, avoidance of traditional banking transaction fees, and the anonymity it can provide, according to the Federal Trade Commission (FTC). Once a payment is made in cryptocurrency, recovering the money is typically only possible if the recipient voluntarily returns it.
Recent data from the Federal Bureau of Investigations indicated that crypto-related fraud cost Americans an estimated $5.6 billion in 2023. The report noted that the decentralized nature of cryptocurrencies allows criminals to exploit the system for illicit purposes, including theft, fraud, and money laundering.
Proposed Registration and Compliance Measures
The ordinance under consideration in Forest Lake would require cryptocurrency ATM operators to register each machine with the city, submit an application, pay a fee of $2,000, and obtain written verification from the Forest Lake Police Department affirming that the operator has had no more than two verified instances of fraud involving their ATMs in the past six months. “Essentially, if you’ve been involved in illicit activities, you won’t be permitted to operate here,” Johnson stated. “As long as you’re maintaining a clean operation, you’re welcome to continue.”
Additional stipulations include posting a warning sign about potential fraud, installing a dedicated closed-circuit camera as directed by law enforcement, providing video footage to the police within 48 hours upon request, and passing compliance evaluations. Furthermore, businesses with previously denied, suspended, or revoked registrations will be ineligible to reapply for two years, according to Johnson.
The primary objective of the ordinance is to protect the community while avoiding a complete ban on cryptocurrency ATMs. “If you aren’t engaging in activities that harm the residents of Forest Lake, you can continue your operations,” Johnson explained.
Growing Concerns Over Cryptocurrency Scams
In 2023 and 2024, local residents reported losses totaling $300,000 from scams related to cryptocurrency ATMs, with a significant portion of the victims being elderly individuals, according to Olstad. “It’s disheartening to realize that this money is likely irretrievable and may even be overseas,” he remarked.
Police have looked into multiple incidents involving the Bitcoin Depot ATM located at the Holiday Station on Broadway Avenue. In one notable case, a police officer noticed a woman about to deposit $16,000 into the Bitcoin Depot ATM. She explained that while working on her laptop, she received a pop-up alert claiming her computer was infected with a virus and instructed her to call a listed phone number. The scammers convinced her that her computer was compromised with child pornography-related malware, leading her to download an app on her phone and access her U.S. Bank account. Subsequently, the scammers guided her to withdraw all her funds and deposit them into a “safekeeping account” they had created.
Fortunately, the woman realized her mistake and halted the transaction before going to U.S. Bank to reclaim her funds and report the incident to the police.
In addition to Forest Lake, officials in two other Washington County cities are also considering measures to protect residents against scams involving cryptocurrency ATMs. Like Forest Lake, Woodbury is contemplating an ordinance requiring registration of businesses hosting the ATMs, while the Stillwater City Council is moving forward with plans to prohibit crypto ATMs within the city. The Forest Lake City Council is scheduled to vote on the proposed ordinance soon.
