Hawaii's financial landscape is facing a new threat: a surge in cryptocurrency ATM scams. This issue is particularly concerning as it preys on vulnerable populations like senior citizens, seeking to separate them from their finances, which could impact local investors as well. According to a recent report by the Hawaii Tribune-Herald, these scams are becoming more prevalent, especially during the holiday season.
The modus operandi of these scams typically involves fraudsters, often impersonating bank personnel or government agencies, contacting victims and instructing them to deposit cash into cryptocurrency ATMs. These ATMs, which resemble traditional bank ATMs, convert cash into cryptocurrencies like Bitcoin. The scammers then guide the victims through the process, with the funds ultimately transferred to the fraudsters' digital wallets. This method of operation leverages the nature of cryptocurrency, where transactions are often irreversible and difficult to trace, leaving victims with little chance of recovering their funds.
Kealii Lopez, AARP state director, described these scams as "an epidemic," highlighting the significant financial losses incurred. In 2024, complaints involving virtual currency kiosks numbered 68 statewide, with 19 on Hawaii Island, and resulted in $922,022 in losses, as reported by the Hawaii Tribune-Herald. However, the actual losses are likely much higher due to underreporting, as victims are often hesitant to admit they've been defrauded. Mana Moriarty, deputy director of the state Office of Consumer Affairs, noted a rapid increase in the presence of cryptocurrency ATMs in Hawaii, which exacerbates the problem.
Law enforcement officials are working to address the issue. Hawaii Police Department Capt. Rio Amon-Wilkins stated that cryptocurrency fraud often targets the elderly. The anonymity of these transactions and the difficulty in tracking down offenders, many of whom operate from outside the country, present significant challenges for law enforcement. Authorities, including AARP, are also working on legislation to limit the amount of money that can be deposited per transaction in these machines and to implement better consumer protections, such as transaction limits and mandatory receipts.
To safeguard against these scams, authorities advise caution. The Nevada Secretary of State, for instance, recommends verifying licenses before conducting financial transactions and that no legitimate business or government agency will instruct individuals to use a Bitcoin ATM. If one suspects a scam, the advice is to cease contact and contact the proper authorities.
