Bitcoin ATMs play a key role in crypto, enabling users to buy and sell BTC conveniently. These machines function similarly to standard ATMs used by conventional financial institutions. However, not all Bitcoin ATMs operate according to established laws. Some have been installed illegally, posing massive risks to individuals who use them.
This article explains illegal Bitcoin ATMs and teaches how to identify them. Read on to learn more.
What is a Bitcoin ATM?
Let’s first understand what Bitcoin ATMs are before diving deeper into illegal ones. A Bitcoin ATM can be described as a machine that facilitates the buying and selling of BTC using debit cards or cash.
When buying Bitcoin via a Bitcoin ATM, you are required to use your BTC wallet to scan a QR code shown on the machine. After you enter the amount of Bitcoin you want to purchase, insert cash or swap your card to complete the transaction. Check your Bitcoin wallet within a few minutes to confirm if the coins have been deposited.
What Are Illegal Bitcoin ATMs?
As stated, illegal Bitcoin ATMs are those that don’t follow stipulated laws and operate without licenses. That means they do not employ the Know Your Customer process, allowing users to transact without verifying their identities. This explains why illicit Bitcoin ATMs have been popular among criminals who aim to carry out illegal activities like money laundering.
Authorities around the world continue to go after illegal Bitcoin ATMs in an effort to prevent unlawful transactions. American regulators have been at the forefront of this fight. For example, the US Department of Justice destroyed over 100 illegal Bitcoin ATMs in 2023. These ATMs allowed scammers to steal nearly $100 million from innocent crypto investors.
Risks Posed by Illegal Bitcoin ATMs
1. Legal Consequences: Even if you are unaware that you’ve been using an illegal Bitcoin ATM to buy BTC, you are likely to face legal consequences if that machine has facilitated illegal transactions.
2. Financial Risks: As mentioned, most scammers use unlicensed Bitcoin ATMs to rob their victims. Therefore, you could lose money transacting through these machines.
3. Privacy Concerns: Considering that Bitcoin ATMs do not adhere to established rules, their operators could sell your personal information to third parties.
How Do You Identify an Illegal Bitcoin ATM?
Here are some red flags to look for in Bitcoin ATMs:
1. No license: Before using a Bitcoin ATM, check if it’s listed on websites like CoinATMRadar and LocalCoinATM. Any ATM whose details cannot be found on these platforms should be considered unlicensed and unsafe for use.
2. Locations: It’s advisable to avoid any Bitcoin ATM installed in a low-end location where there is low supervision.
3. No KYC: If a Bitcoin ATM doesn’t require you to complete identity verification, then it is likely illegal.
4. Unreasonable fees: Any Bitcoin ATM charging excessive fees, say 20% of the transaction amount, should be regarded as illegal.
5. Lack of Maintenance: A legitimate Bitcoin ATM is usually well-maintained. Therefore, if you come across one that functions poorly, then avoid making any transaction.
How Do You Stay Safe?
The following are tips for staying safe when using Bitcoin ATMs:
1. Only Transact on ATMs offered by Trusted Providers: Before using any ATM, research reputable operators within your area and where to find their Bitcoin ATMs.
2. Exercise Caution When Sharing Your Personal Details: Legit Bitcoin ATMs require users to only provide their government-issued IDs and phone numbers for KYC purposes. So, if an ATM requests additional information, we recommend avoiding it.
3. Avoid ATMs in High-Risk Locations: To reduce the risk of transacting on an illegal Bitcoin ATM, it is advisable to only buy BTC via ATMs installed at reputable premises.
Final Thoughts
While Bitcoin ATMs offer a convenient way to enter and exit the crypto space, they also pose several risks that you should be aware of before using any.
