Burlington Moves to Ban Crypto ATMs

The Burlington Police Department has submitted an article to Burlington's January Town Meeting that would ban cryptocurrency ATMs such as Bitcoin ATMs across Burlington.

What are crypto ATMs?

You might never have noticed a "crypto ATM" but, said Burlington Police Lieutenant Detective Matt Leary, once you know what they are, it's hard to miss them.

Speaking to the Select Board at their December 15 meeting, Leary said the ATMs are often located in small gas stations and convenience stores, and the store owners are paid monthly to host them. While cryptocurrency is relatively new and some find it difficult to understand, it is becoming more common. Users can deposit cash into the machines, converting it to electronic currency, and add it to a crypto wallet – a virtual wallet for the virtual money.

But, if that wallet belongs to someone else, chances are the money is gone forever – that's how crypto ATMs can be used to dupe unwitting members of the community into parting with tens of thousands of dollars they'll never see again.

The role of crypto ATMs in financial scams

"The Police Department over past last three to four years," Burlington Police Chief Thomas Browne told the Select Board, "has seen an uptick in scams that revolve around these cryptocurrency ATMs." Browne said the machines are unregulated and pose a risk to consumers as scammers prey on the elderly and vulnerable.

Lieutenant Leary has gone along with a number of scams to learn about them in his role as as Detective. In addition, "The longer they speak to me, the less chance they're going to talk to someone and actually be successful."

While the tactic depends on the audience, scams begin with a text, email, or phone call. Your grandchild has been arrested, or your child has been in a car crash, or your credit account has been used in an unauthorized way, or there's a compromising video or photo of you. "They raise the stakes to freak people out," said Leary, which creates a sense of urgency to clear up the issue.

Whatever problem has been uncovered, the only way to fix it, according to the scammer, is to withdraw large sums of money from the bank – sometimes several banks, so the transactions aren't flagged for suspicious activity – and deposit the cash into a crypto wallet via one of these cryptocurrency ATMs. Throughout this process, the scammer keeps the victim on the phone under the guise of being supportive and helpful. In actuality, they're ensuring the victim hasn't involved the authorities.

And if a victim asks for proof of legitimacy, often the scammer can provide it. "Everything is so technologically advanced now that they can spoof voices, they can spoof numbers," said Leary. And those spoofs can be convincing enough to sway even the biggest skeptic. Leary described getting a call that appeared to be from the Burlington Police Department's phone number from an officer that doesn't exist. "They can spoof Department phone numbers to further legitimize the scam."

But once the scammer's ultimate goal has been achieved, there is no way to make these victims whole again. "As soon as the money is converted [from cash], it's gone," said Chief Browne. Leary added that the district attorney's office had initially supported the department's attempt to recover money by seizing the machines and the cash inside them as evidence of a crime, but the ATM company sued and the money had to be returned. The user had agreed to the terms and accepted the disclaimers, they company contended, before using the machine in the first place – which means the ATM company wasn't at fault for any theft that occurred.

Ways to stay safe against crypto scams

Leary said the Department is trying to insulate all citizens, but especially the senior population. He advises residents to be wary of unsolicited calls from unfamiliar numbers. If you suspect a caller is trying to involve you in a scam, "Call the Police Department," he said. "They can slow things down and guide you in the right direction." You can also go directly to the station and speak with an officer.

Leary also said the federal government does not at this time deal in cryptocurrency, and a government agency such as the FTC would not reach out asking for cryptocurrency. And, he advised, arrestees are subject to due process; anyone who is being detained would not be held without the ability to communicate with anyone.

Regulating at a local level

There are legitimate uses for crypto ATMs, said Leary, but "the fees that these particular standalone ATMs charge are exorbitant" compared with other ways to convert and trade cryptocurrency. "That's why legitimate business more than likely wouldn't be done at those machines, because it's just not cost effective."

The problem posed by crypto ATMs has yet to be addressed at the federal or state level, said Browne and Leary, which means municipalities have had to take matters into their own hands. Waltham and Gloucester, for example, already have ordinances on the books prohibiting the machines.

If the bylaw is passed, locations that host crypto ATMs will be notified of the change and, after a grace period, fined for noncompliance. Browne and Leary didn't anticipate pushback from stores. The Select Board voted 5-0 to support this article at January Town Meeting.

Anyone needing support or having questions can reach out to Detective Reynolds, the Department's Senior Liaison, or Lieutenant Leary. The station phone number is 781-272-1212, and the station is at it's temporary location at 171 Middlesex Turnpike until the new building is completed in 2028.