DC Attorney General Brings Lawsuit Against Bitcoin ATM Operator

McGlinchey reports that the DC Attorney General has filed a lawsuit in Superior Court against Athena Bitcoin, Inc., one of the nation’s largest Bitcoin ATM operators.

The complaint, District of Columbia v. Athena Bitcoin Inc., alleges violations of consumer protection and elder exploitation laws. It claims that Athena’s business practices facilitated large-scale scams affecting elderly residents in the District.

At the core of the suit is the assertion that Athena knowingly profited from fraudulent activity while imposing steep, undisclosed fees.

Bitcoin ATMs, or BTMs, were designed to let consumers purchase cryptocurrency with cash and transfer it to digital wallets. The District argues that the machines instead provide fraudsters with a direct path to victims’ savings.

Scammers allegedly pose as trusted institutions and instruct targets to move cash into a Bitcoin ATM “for protection.” Once deposited, the funds are transferred to a wallet controlled by the scammer, and the transaction is irreversible.

Athena is further accused of charging fees as high as 26%, and allowing repeat use of wallets previously linked to fraud.

The complaint situates Athena within a broader trend of enforcement and regulation. Federal agencies, including the FTC and FBI, have tracked sharp increases in BTM-related fraud, with losses in the hundreds of millions in recent years.

Arizona, Maryland, and Vermont have passed legislation establishing limits, disclosures, and compliance requirements for crypto ATM operators. These measures reflect growing concerns about consumer protection risks associated with the industry.

Litigators can assume that AGs will use consumer protection statutes to target new financial technologies in general, and crypto-enabled fraud in particular. The FTC reported that fraud losses involving BTMs increased nearly tenfold from 2020 to 2023.

Even if Athena prevails, the trajectory points toward increased oversight, more stringent state legislation, and potential liability exposure for intermediaries.