Cryptocurrency ATM fraud on the rise in Hawaii, officials warn

Cryptocurrency ATM scams are on the rise in Hawaii, adding another threat intended to separate people — especially senior citizens — from their hard-earned money this holiday season.

Kealii Lopez, AARP state director, called the scams “an epidemic” during a Dec. 3 informational briefing about scams by the state House Committee on Consumer Protection and Commerce.

Lopez told lawmakers that in 2024 complaints about scams involving virtual currency kiosks, which resemble a bank ATM, but sell Bitcoin or other cryptocurrency, numbered 68 statewide, with 19 on Hawaii Island, and resulted in $922,022 in losses.

Lopez said the amount lost in such scams is likely much higher because of
under-reporting. She added that people oftentimes don’t want to admit to having fallen victim to fraudsters.

“The number of complaints have almost doubled in a year,” Lopez said. “So, imagine what happens if we don’t do anything.”

Mana Moriarty, deputy
director of the state Office of Consumer Affairs, testified his office did “a point-in-time count” last month and identified about 250 cryptocurrency ATM machines in Hawaii.

“So, we’re looking at a rapidly increasing presence of cryptocurrency ATMs in the state,” Moriarty said.

The kiosks are run by companies such as CoinFlip, Bitcoin Depot and Athena Bitcoin, and users turn cash into cryptocurrencies. They’re usually located in businesses that are paid rent for hosting the machine. After cash is deposited, the companies send the money to cryptocurrency accounts. The ATM operators charge users fees for processing transactions.

“Scammers, often impersonating bank personnel, call would-be victims to tell them their account had been hacked and they are in danger of losing their life savings,” Lopez said. “The proposed fix is for the victim, often a kupuna, to transfer their savings, electronically, by clicks from a cellphone app into a Bitcoin ATM for safety.

“I’ve heard situations where someone — a salesperson or someone in the establishment maybe didn’t realize what was happening — saw an older person putting in money and offered the person a chair so they could sit while they’re feeding in the money — again, perhaps not realizing that it’s a scam.”

Hawaii Police Department Capt. Rio Amon-Wilkins of the East Hawaii Criminal Investigation Division told the Hawaii Tribune-Herald that cryptocurrency fraud, like other scams, “seems more often than not target the
elderly.”

“It seems they’re getting a phone call, and they’re
being provided instructions to go to a certain location where there is a crypto machine,” Amon-Wilkins said. “They’re given instructions on how to insert money into the machine. And it seems, more often than not, the (victims) are instructed to stay on the line with the caller throughout the duration, as (the scammer) is providing instruction to them.

“We actually had one case where that actually happened, several months back. This happened at a grocery store here in Hilo, and the victim deposited ‘X’ amount of money into the machine — and actually, a family member was at the store at the time, saw what was happening, and alerted police. And we were actually able to recoup the money for the person.”

According to Amon-Wilkins, the victim had fed more than $1,000 into the machine and “was prepared to deposit a lot more” when officers arrived and stopped her.

Police took the machine into evidence to recover
the money, something that doesn’t often happen,
probably because very few ongoing cases of fraud are witnessed firsthand, and many simply aren’t reported. It’s also rare that the scammers are identified, much less apprehended.

“It’s oftentimes quite difficult for us to track down the offenders, because many of them are out of the country,” Amon-Wilkins said. “If they’re outside the country, it’s extremely problematic for us to identify them.”

Lopez said AARP is working with lawmakers on legislation to limit the amount of money that can be deposited per transaction into a cryptocurrency machine. She said such a measure should contain daily transaction limits, refunds in cases of fraud, live customer service during
operating hours and paper receipts for transactions,
disclosed fees and fee limits, and a dedicated contact line at the kiosk company for
law enforcement conducting investigations.

This past legislative
session, House Bill 1277, introduced by Rep. Jenna Takenouchi, an Oahu Democrat, with co-signers including Hilo Democrat Rep. Sue Keohokapu-Lee Loy, made it through the House but died in the Senate without being heard by any committees.

Rep. Scot Matayoshi, the House Commerce and Consumer Protection chairman and also a co-signer on
HB 1277, said during the Dec. 3 briefing that in his committee, he decreased deposit limits in the ill-fated bill from $2,000 to $1,000 per transaction.

“I’ll be introducing legislation next year to make that number zero, so that you cannot purchase money, purchase Bitcoin through an ATM at all,”
Matayoshi said. “You can withdraw money, if you want, if you already have it in crypto, but you cannot purchase money, purchase crypto through an ATM.”

“Scammers can spoof a phone number so they can use an 808 number or make it look like they’re using an official phone number,” he added. “They can have a website that looks very much like the website of your banking institution. The issue is to look on your card … for a phone number that’s not from that fake site, to call your bank directly.”

Jon Turke, director of government affairs for CoinFlip, told lawmakers cryptocurrency ATM scams are drawing an undue amount of scrutiny because it’s a relatively new technology. He said an FBI report mentioned by Lopez “showed less than 3% of all money that was lost in cryptocurrency scams was at a cryptocurrency kiosk.”

“Over 97% was elsewhere, on an online portal somewhere.” Turke said, adding the percentage is “even smaller when you look at scams using gift cards, PayPal, Venmo, etc.”

“The amount of scams that we’re seeing (at the
kiosks) are vastly outweighed by every other financial service product,” he said.

Joely Chung, a senior vice president for First Hawaiian Bank, said communications initiated by a legitimate financial institution won’t ask for account or Social Security numbers, passwords or other confidential info. She advised those who receive such communications to “call the bank number on the back of your credit card, not one in an email or over the phone, or call 911.”

Added Amon-Wilkins: “The bottom line is, if you receive a phone call instructing you to deposit money or transfer money or anything like that, if you’re not able to 100% verify who the caller is and they’re with a legit financial institution that you are a member of, don’t do it.”