Germany seizes 13 BTC ATMs, nearly $280K in fresh crackdown

Getting your Trinity Audio player ready...

German authorities have seized 13 BTC ATMs across the country that were operating without a license in a fresh crackdown.

Germany‘s Federal Financial Supervisory Authority (BaFin) led the multi-agency crackdown that spanned 35 locations. The country’s central bank, Federal Criminal Police Office, and other local law enforcement agencies were also involved in the operation.

In a statement published this week, BaFin revealed that it had seized €250,000 ($($279,000) in cash from the “crypto” ATMs.

The regulator says the ATMs had been operating illegally, in breach of the country’s Banking Act. Since they facilitated the exchange of fiat for digital assets, they were required to obtain licenses from financial market authorities.

BaFin warned other BTC ATM operators against operating without a license, noting that the machines could be a cradle of crime if the necessary KYC and AML programs were not observed.

The BTC ATM crime wave

BaFin joins its peers in other countries who have been clamping down on BTC ATMs in the past two years. In neighboring U.K., the Financial Conduct Authority (FCA) conducted a crackdown in 2023, shutting down 26 machines that were either operating illegally or had been used for crime.

In one particular case, a BTC ATM in Sheffield was shut down after a user lost £1,000 ($1,112) in a failed transaction. Several attempts to contact the operators to resolve the mishap were unsuccessful.

“If you use a crypto ATM in the UK, you are using a machine that is operating illegally and you may be handing your money over to criminals,” warned the regulator at the time.

By mid-last year, the number of BTC ATMs in the U.K. had dropped 90% owing to the FCA’s crackdown. Today, according to Coin ATM Radar, no active ATMs exist in the country.

The U.S. dominates the BTC ATM sector with 31,900 machines, representing 82% of the global figure. However, even here, regulators have been cracking down on the industry. In May, over 300 machines went offline, many due to regulatory actions.

One of the main reasons behind the increasing shutdowns is the rise in crime via these machines. Multiple reports from authorities like the Drug Enforcement Administration (DEA), the Federal Bureau of Investigation (FBI), and blockchain analytics firms like Elliptic have revealed that scammers direct victims to deposit cash in the ATMs, which they receive as digital assets.

Last year, U.S. authorities arrested the operators of Bitcoin of America, on allegations that they were aware their machines were being used for crime but did nothing about it.

According to the Internet Crime Complaint Center (IC3), a cybercrime reporting hub run by the FBI, there were over 15,000 complaints involving digital asset scams from individuals aged 60 and above last year, with total losses exceeding $1 billion. Of these, 2,000 involved BTC ATMs.

ATM operators have fought back and defended their operations, which they claim are boosting financial inclusion. However, some charge a premium as high as 33% and are found almost exclusively in major cities, where financial inclusion is highest.

“Based on our own user surveys, a majority of our users use our products and services for non-speculative purposes, including money transfers, international remittances, and online purchases, among others,” said Bitcoin Depot, the largest BTC ATM operator in the United States.

Despite the growing menace and crime from the BTC ATMs, little has been done at the federal level. This has sparked action at the state level: the city of Chico in Northern California is advancing a new bill that will regulate ATMs like traditional financial institutions.

Watch: Blockchain regulation with Marcin Zarakowski