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Cipher Trace: Bitcoin ATMs Are Being Used for Illicit Purposes


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It looks like bitcoin ATMs are likely to be the next target of U.S. regulators.

Bitcoin ATMs Are Being Used for the Wrong Reasons

Bitcoin ATMs have grown in both size and scope over the past few years. There are approximately 8,000 machines all over the world, and as the love of crypto has gotten bigger, so has the presence of bitcoin ATMs. These machines are now seen as a convenient way to transfer funds and purchase bitcoin with cash or with other forms of crypto in a simple, quick, and convenient way.

However, a new report from blockchain security firm Cipher Trace suggests that perhaps these ATMs are being used for improper purposes. The report says that a lot of these machines are being used to send money to high-risk exchanges, which suggests that perhaps money laundering is a relatively common occurrence.

The document states:

The percentage of funds sent to high-risk exchanges from U.S. BATMs [bitcoin ATMs] has seen exponential growth, doubling every year since 2017.

Three years ago, only about two percent of funds allocated through bitcoin ATMs went to high-risk exchanges. Today, that number has expanded to just over eight percent. This means that the amount of money going to these exchanges has quadrupled in just 36 months. In addition, the report says that most of the money garnered through ATMs – roughly 88 percent – is being stored in offshore accounts. The document says:

Bitcoin ATMs are likely to be the next major regulatory target.

According to Coin ATM Radar, the number of bitcoin ATMs in the world has grown exponentially over the past year. The current figure is roughly 8,300 machines. In 2019, the number was only 5,000 machines, meaning that more than 3,000 have been added in just 12 months. That’s an increase of about 60 percent.

Furthermore, the rate of installation has more than doubled since the beginning of 2020, with more than 1,000 new machines being installed from December to January of this year, and another 1,000 installed by late March. Lastly, of the 8,300 bitcoin and crypto ATMs in the world, more than 6,000 are located within the United States.

Despite the alleged hike in money laundering tactics, bitcoin ATM operators claim they are doing all they can to remain compliant with present know your customer (KYC) and FINCEN (Financial Crimes Enforcement Network) laws. All bitcoin ATMs operators, for example, must register as money services businesses and are required to keep track of all their transactions.

We’re Trying to Remain as Compliant as Possible

Sheffield Clark – the CEO of Coinsource, which operates more than 500 machines – explained in an interview:

Compliance is key. Once we learned how important compliance was… we obviously invested heavily in building our AML and KYC program and then staffing it correctly with experts that could support us in the venture.

Nick Marinoff
Nick Marinoffhttps://www.livebitcoinnews.com/
Nick Marinoff is currently a lead news writer and editor for Money & Tech, a San Francisco-based broadcasting station that reports on all things digital currency-related. He has also written for a number of other online and print publications including Black Impact Magazine, EKT Interactive, Seal Beach USA and Benzinga.com, to name a few. He has recently published his first e-book "Take a 'Loan' Off Your Shoulders: 14 Simple Tricks for Graduating Debt Free" now available on Amazon. He is excited about the potential digital currency offers, particularly its ability to finance unbanked populations and bring nations together financially.


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