At Least $5 Million Lost to ATM Bitcoin Fraud in San Diego in 2023: Reports
Automated teller machines for Bitcoin, the latest innovation appropriated by fraudsters to get money out of the hands of victims and into their own, are increasingly showing up in San Diego County.
One Bitcoin website identified 17 locations around the county for its machines, from Alpine to Tijuana to Encinitas.
The way it works is as follows: Customers insert cash or a debit card into the ATM to exchange traditional currency for bitcoin currency. Only identification is needed to access the machines.
Victims, many of whom are seniors, are instructed to change the money and then send the bitcoin currency to an encrypted address. Not long after that, the money is moved quickly across the county or around the globe.
The machines can be found anywhere that traditional ATMs can be found. The multiple locations are easy conduits for fraudulent withdrawals.
San Diego's Elder Justice Task Force — a collaboration between the DA's office, FBI, APS, local law enforcement, and the US Attorney's Office — reports that in 2023, victims in San Diego County alone lost a total of more than $5,000,000 to fraud by placing money into the machines.
Nationally, the FBI reports that in 2023, more than 12,000 victims aged 60 and older indicated that cryptocurrency was a medium or tool used to facilitate the scam or fraud that targeted them.
At a U.S. Senate Special Committee on Aging hearing last week, Democratic Sen. Richard Blumenthal discussed a letter he and other senators had written to large Bitcoin ATM operators on their failures to prevent elder scams.
Several witnesses testified that the problem is rampant and needs to be addressed immediately.
Among those speaking was San Diego Deputy District Attorney Scott Pirrello, who was invited because of his breadth of experience with the many types of elder abuse fraud.
Pirrello, who heads Elder Abuse Prosecutions within the DA's office, told the senators on the panel that a victim in Escondido who withdrew $15,000 from her bank went into a liquor store in a dangerous part of town in the middle of the night.
That's how convincing these con men are in motivating victims to actand how so much is being stolen, Pirello said.
Pirrello added that in San Diego and around the country, there's frustration growing within law enforcement.
"We have a victim that runs to the police station and says, I just put $10,000 into this machine, and my money is sitting right there in that machine. Can you get it back for me? And so far, there is an inability to do that because of the nuance of how these cryptocurrency transactions work."
"The window is so tight for there to be any intervention, and so there should be as many safeguards as possible to prevent these victims from putting their money in these machines in the first place," he said, noting that it took just twelve minutes to send the Escondido victim's money to southeast Asia, outside U.S. jurisdiction.
The lies take many forms, but right now tech and personal information scams top the list, according to data collected by the FBI. The scams take advantage of the lack of familiarity by older citizens with computers and cybersecurity issues.
For example, a pop-up message might appear, falsely warning that a device is damaged or needs fixing, or that a bank account needs immediate attention.
When the victim calls or emails for "support" help, the scammer often requests remote access to the their computer. And more and more often, the senior ends up taking a trip to a local bitcoin ATM , which is the address provided by the scammer.
Kathy Stokes with AARP Fraud Watch , who also testified before the committee, estimates that multiple millions of dollars are being stolen and routed through the ATMs. The victims "go to their bank, take out tens of thousands of dollars in cash, then telling them where to go to find the crypto machine, and then them standing there and putting $100 at a time into these machines, and coaching them on how to get that money to the electronic wallet."
The victim "thinks that this is going to solve a problem," not realizing they "just created all that much more," she says.
Virtually nothing is being done by the companies themselves to try to forestall these frauds, witnesses said.
Pirrello added that some of the ATM companies are being responsible in the sense that they will submit suspicious activity reports — but well after that victim's money is unrecoverable.
He and Stokes called for more and better regulation, clearer warnings about the risks inherent in anonymous systems such as Bitcoin, and legislation targeting scams such as these. SB 401 , which goes into effect in 2025, creates a transaction limit of $1,000 a day per customer per machine.
But Pirello says his office is already seeing cases where victims are being instructed to move from machine to machine to overcome this transaction limit.
