Automated Teller Machines [ATMs] has acted as the backbone of the retail payments landscape for over fifty years. Acting as a physical access point, ATMs have now made its way to the digital age money space we now know it as the cryptocurrency industry. Over the years, Bitcoin ATMs have sprung up at a highly impressive rate. And with it, the crimes.
In the latest development, the Hong Kong authorities reportedly arrested three persons linked with the alleged siphoning off $226,000 in Hong Kong dollars from six Bitcoin ATMs in 11 transactions. The police suspected that the arrested individuals are the”core members” of a “larger syndicate”.
According to the South China Morning Post report, the three males arrested were between 26 and 55 years of age. The two platforms reportedly suspected foul play and exploitation of “loopholes” in the Bitcoin ATMs after noticing cash withdrawals. The authorities were able to arrest the trio two days after cryptocurrency exchanges had filed a report.This development was first of its kind in the Mong Kok region
Following the arrest, the Superintendent of Hong Kong’s Cyber Security and Technology Crime Bureau [CSTCB], Wilson Tam reportedly stated,
“I cannot reveal what the loopholes are. But any bitcoin transaction needs verification. Maybe the ring bypassed the verifying process before taking the money.”
Tam further revealed to have offered to the two cryptocurrency companies to upgrade their systems.
Consistent growth of Bitcoin ATMs
According to the Bitcoin ATM tracking website Coin ATM Radar, there were a total of 9,106 Bitcoin ATMs in the world while 52 of them are in Hong Kong. Interestingly, since the start of the year, Bitcoin ATM installations have doubled.
Increasing criminal activities tied to Bitcoin ATMs
While the expansion of the Bitcoin ATM marketplace has been nothing short of remarkable, it is the soaring criminal activity leveraging this space that has become a cause of concern.
Across the Pacific, Bitcoin ATMs in the US sent more funds to high-risk cryptocurrency exchanges than low-risk exchanges in 2019. This was found by a recent report by Cipher Trace, the percentage of funds from the US-based Bitcoin ATMs sent to this category of exchanges had grown exponentially.
According to the crypto-analytic firm, high-risk exchanges are classified as those which have a record of nefarious activities known for facilitating criminal activities and money laundering. And it was also found that as high as 8% of the US Bitcoin ATM payments are sent directly to high-risk exchanges.
Dismantle of Bitcoin ATM operation
In another development, the U.S. Department of Justice [DOJ] last month revealed to have taken down a Bitcoin ATM operation worth $25 million. It also reportedly seized 17 machines along with some cryptocurrencies from a man who was not licensed for Bitcoin ATM operations.
The perpetrator, Kais Mohammad, further admitted laundering of millions of dollars of Bitcoins as well as cash