Illegal activity in crypto ATMs doubles industry average: TRM Labs
Crypto ATMs, which allow users to purchase cryptocurrencies using cash, have become a major catalyst for illicit transactions in recent years. A recent report from blockchain intelligence firm TRM Labs revealed that the volume of illicit activity involving crypto ATMs is twice that of the broader crypto ecosystem. Between 2019 and 2024, crypto ATMs processed around $160 million (roughly Rs. 1,342 crore) worth of illicit crypto transactions, the report said.
In recent years, law enforcement agencies have stepped up their efforts to implement blockchain intelligence to detect and investigate financial crimes. Despite these efforts, crypto ATMs are increasingly being used to exchange ill-gotten funds for cryptocurrency.
“Last year, illicit volumes in the cash-to-crypto industry amounted to 1.2 percent of total volume, double the 0.63 percent for the overall crypto ecosystem. According to TRM, more than $30 million (approximately Rs. 251 crore) went to known scam addresses via cash-to-crypto services in 2023,” a report according to TRM Labs.
Crypto ATMs allow people to use debit and credit cards in addition to fiat currencies to purchase crypto tokens. In its report, TRM Labs said that multiple payments sent from different ATMs end up transferring cash-to-crypto assets to a few addresses that flag suspicious activity.
In June 2022, the global number of crypto ATMs rose to 880, according to an older Coin ATM Radar report. The report also indicated that an average of 16 to 23 crypto ATMs were being established globally at regular intervals.
The momentum of crypto ATMs being set up eventually slowed down. In January 2023, it was reported that only 94 machines were installed in different parts of the world between July 2022 and January 2023. El Salvador, the US, Australia, Canada, and Spain emerged as countries where crypto ATMs were set up during that time.
The UK has been ramping up its crackdown on crypto ATMs since last year. In February 2023, the Financial Conduct Authority (FCA) ordered law enforcement agencies to track down and shut down unregistered crypto ATMs. Authorities found that many operators were running these machines without proper registration.
The UK isn’t the only country cracking down on crypto ATMs. Germany recently joined in, with the Federal Financial Supervisory Authority (BaFin) seizing 13 Bitcoin ATMs in August. Authorities said the machines didn’t comply with German Banking Act.
“While illicit actors are using cryptocurrencies to move money across borders more quickly, crypto ATMs face additional vulnerabilities to money laundering due to the use of cash and the lack of face-to-face communication or accounts receivable checks. As with any virtual asset provider, a strong compliance infrastructure is critical to addressing the risks,” the TRM Labs report said.
