Crypto ATMs Process $160 Million in Illicit Funds Since 2019, TRM Labs Says

In a worrying trend, TRM Labs found that illicit activity in crypto ATMs is significantly higher than in the broader crypto industry.

This has led to law enforcement and regulators around the world leveraging blockchain intelligence to investigate fraud and financial crimes involving these machines.

Increase in illicit activity at crypto ATMs

According to the latest report from TRM Labs, these cash-to-crypto services, which allow users to exchange physical currency for digital assets, have processed at least $160 million in illicit volumes so far since 2019.

In 2023 alone, the share of illicit transactions in crypto ATMs reached 1.2% of their total volume, compared to only 0.63% of the entire crypto ecosystem.

The blockchain intelligence platform said this disparity highlighted crypto ATMs’ unique vulnerabilities to fraud and money laundering. Unlike traditional cryptocurrency exchanges, these machines often lack strict Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols, making them attractive to criminals looking to move funds anonymously.

The report also revealed that more than $30 million in illicit volume in 2023 was linked to known scam addresses, highlighting the role of crypto ATMs in facilitating fraudulent schemes.

The findings come as global regulators step up their scrutiny of the cash-to-crypto sector. In Germany, authorities recently seized 13 unlicensed Bitcoin ATMs and confiscated nearly €250,000 in cash, highlighting ongoing efforts to curb illegal activities associated with these machines.

Similar crackdowns have been seen in other countries, including the United Kingdom and the United States, where regulators have shut down numerous illicit ATMs in recent years.

Australia’s Crypto ATM Boom

Amid concerns that these machines could be exploited by bad actors for money laundering and other illicit activities, the adoption of crypto ATMs in Australia has skyrocketed. In the last two years, TRM Labs found a staggering 17-fold increase in the number of kiosks in the country.

This rapid growth has positioned Australia as the third largest crypto ATM market globally, behind only the United States and Canada. The increase reflects increased demand for convenient access to digital assets, especially in a country where crypto adoption is steadily increasing.

However, this expansion also brings increased scrutiny from regulators concerned about the potential for these machines to be used in illicit activities. As the number of ATMs grows, Australian authorities are stepping up efforts to ensure operators comply with AML protocols, aiming to strike a balance between encouraging innovation and safeguarding the financial system.

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