The scam involves the use of “crypto kiosks,” which allow a person to convert cash into Bitcoin or other cryptocurrencies, that can be found at some businesses or malls. Scammers often pretend to be a loved one, a government agency or gain a person’s trust in some other way before asking them to deposit a large sum of money into one of these cryptocurrency ATMs.
In a press release Friday about the law going into effect, Mayes celebrated its “commonsense protections” but warned that scams involving cryptocurrency is something that still needs to be addressed.
“Last year, Arizonans lost an astounding $177 million in their hard-earned savings to cryptocurrency scammers. This is a good first step, but we need to do even more to protect Arizona seniors from these persistent criminals,” Mayes said.
The Cryptocurrency Kiosk License Fraud Prevention law lowers the daily transaction maximums, increases warnings on the machines and requires transaction receipts. Operators of the machines also must issue a refund to victims of fraud.
The law was sponsored by Rep. David Marshall, R-Snowflake, who told the Senate Judiciary and Elections Committee earlier this year that his constituents in Northern Arizona would drive down to Phoenix to deposit money into one of these ATMs as part of one of these scams only to find their money gone when they got home.
Last year, YCSO and the AG issued letters asking business owners in Yavapai County to put warnings on the machines similar to those displayed around gift cards at stores, due to the proliferation of a similar type of scam in which victims purchase gift cards and send them to scammers.
In 2023, Americans lost $5.6 billion in cryptocurrency related scams, with the majority of victims being the elderly.
Crypto heists have become a growing concern, with North Korean hackers recently making the largest haul of $1.5 billion in cryptocurrency. But other types of scams involving artificial intelligence are also seeing large sums of cash being stolen. Last year, scammers using deep fakes convinced finance workers to send them $25 million.
The law limits daily transactions to $2,000 a day for new customers and $10,500 for existing customers. Any new customer who reports to an ATM operator that they have been a victim of fraud within 30 days will be required to get a full refund.
There are an estimated 600 cryptocurrency ATMs in the state, according to the AG’s Office. The Scottsdale Police Department has reported $5 million lost by residents due to cryptocurrency scams this year alone.
Due to the lack of regulations and traceability of cryptocurrency, scammers have flocked to it as a means of fraud.