Introduction
Crypto ATMs are becoming popular in places like Australia, the UK, Germany and other countries. These machines provide a way to purchase crypto using fiat without going through the bank. In essence, users do not need a bank account to run the transaction. Because of reported cases of fraudulent transactions and risk of loss to the user, financial regulators in some places are fighting hard to remove illegal crypto ATM machines from service. Leading this clampdown are Financial authorities in Germany.
13 crypto ATM machines seized in Germany
Financial regulators in Germany were aware of some Illegal operators of crypto ATM machines in that country. With more reports of fraudulent transactions from these devices, the country's financial regulator moved last week to stop their devices from service. In the operation, up to 13 machines were confiscated and 250,000 million Euros was also seized across the devices.
The ATM machines siezed were operating without the required government licence. Hence, they are presumed to pose a lot of financial risk to the user according to the report. These machines allows users to change Euros to crypto and move the funds to a wallet without the need for a bank account. So the German authorities are worried since there is no record or identification of the person making the transaction. It was thus reported that while these crypto ATM machined process huge volume of transactions, there must be a proper KYC process for each customer.
The report also highlighted another big danger of unregulated crypto transactions via the machines. It warned that the ATMs also attract lots of criminals that are eager to hide their identity to commit financial crimes. It is easy for them to quickly convert illicit funds to crypto and move it around the country or elsewhere. Besides, the owners of the ATM machines sometimes provide little to no customer support which has led to customers loosing their money when transactions reverse or when they encounter other challenges.
The BaFin is in the public interest. Its main goal is to ensure a functional, stable and integral German financial system. Customers of banks, insurers and investment service providers should be able to trust the financial system. source
$160 million in illegal ATM transactions since 2019
Evaluating a recent report by TRM labs make obvious the size of problems created by illegal ATM machines. TRM reported that since 2019, illegal crypto ATM operators have facilitated transactions in excess of $160m. This is clearly a big way for fraudulent and illegal funds to get moved around without the authorities intervening.
The problem is usually double-headed. A scammer might install the machine and make it work incorrectly. For example, such a machine might randomly seize fiat deposited by a user while not allowing them to obtain the crypto and transfer it. In this case, the stranded user might not be able to make any official complain to the operators or ask for help since there is no direct, instant way to reach out to them. This kind of experience have been noted by users in several places such as the UK.
The biggest risk is that illegal crypto ATM's are great for fraudulent activity. Criminals would love the idea since there is no KYC process required to use the machine. Just deposit fiat and send the crypto equivalent to an address anywhere on the globe. TRM analysis of these transactions made through the ATMs show that they are almost always done by criminals.
Typically, on-chain activity of ATM-based fraud schemes shows a litany of ATM transactions, which can span geographic borders and service providers, benefitting fraudster aggregation addresses. Investigators can use blockchain intelligence to both trace and freeze the proceeds of the fraud schemes, and even trace backwards to identify unknown victims.source
Valuable tool which could be exploited
Looking at the matter from crypto adoption point of view, these ATMs could be a welcome development. With the ability to complete transactions without requiring a bank account, crypto ATMs could facilitate crypto adoption in a grand scale and also take financial inclusion to a whole new level previously unknown. Imagine the huge impact such ATMs could have if there are many of them in different places across each city. However, this tool like every other modern invention could be exploited.
Crypto ATM operators that avoid going through government registration are always going to pose a big risk to the public. As shown above, they will either try to scam users and steal their funds or they will try to facilitate illegal transactions and hide from the law. Either ways, its a big problem.
If they are available in your country, it is important that you first of all check to ensure that the machine is licensed to operate. Unregulated machines should be avoided. Its difficult to recover your money if the transaction goes wrong.
Note: All images are from pixabay
Posted Using InLeo Alpha