In this news:
An elderly Forest Lake man lost almost $1 million after scammers persuaded him to withdraw cash from his bank and deposit it into a cryptocurrency ATM.
Another resident told police he lost $600,000 before he realized he was being scammed.
“It’s sad. They get in a panic, they just get tunnel vision, and they lose all sense of reasonableness,” said Det. Nathan Olstad of the Forest Lake Police Department.
Once the cash is deposited into a cryptocurrency ATM, it is almost impossible to recover the funds, Olstad said.
The Forest Lake City Council is expected to vote on a new ordinance next week that could help others from being scammed. The proposed ordinance would require that all cryptocurrency ATMs located within the city be registered.
City officials already register businesses that pose obvious public health or safety concerns, such as liquor stores, cannabis shops and tattoo parlors, said City Attorney Amanda Johnson. Cryptocurrency ATMs are no different because of the amount of fraud running through the machines, the vulnerable population groups targeted and the inability to recover the stolen funds, Johnson said.
Cryptocurrency ATMs
Cryptocurrency ATMs or kiosks resemble conventional ATMs, but they focus on cryptocurrency-related transactions. People can use them to withdraw funds from their cryptocurrency accounts or purchase more cryptocurrency.
People use cryptocurrency for many reasons: quick payments, to avoid transaction fees that traditional banks charge or because it offers some anonymity, according to the Federal Trade Commission. Once you pay with cryptocurrency, you can usually only get your money back if the person you paid sends it back, according to the FTC.
In 2023, crypto fraud cost Americans an estimated $5.6 billion, according to a report from the Federal Bureau of Investigations.
“Since cryptocurrencies eliminate the need for financial intermediaries to validate and facilitate transactions, criminals can exploit these characteristics to support illicit activity such as thefts, fraud and money laundering,” the report states.
The proposed Forest Lake ordinance would require owners of businesses where cryptocurrency ATMs are located to register each machine with the city; complete an application; pay a $2,000 fee, and provide written confirmation from the Forest Lake Police Department that the cryptocurrency ATM operator “has had no more than two instances of substantiated fraud, as determined by the FLPD involving any kiosk owned or operated by that kiosk operator within the city in the past six months,” according to the proposed ordinance.
“Basically, if you’ve been behaving badly, you don’t get to play here,” Johnson said. “As long as you’re keeping it clean, fine.”
Other proposed requirements for registration: the posting of a city-provided sign warning of the danger for fraud and scams; the installation of a dedicated, closed-circuit camera, positioned as required by police; agreeing to provide video footage to the police department within 48 hours of request, and passing compliance checks.
In addition, if a business has had a previous registration denied, suspended or revoked, the owner of the business may not apply for a new registration for two years, Johnson said.
The goal of the ordinance is to balance the protection of the community without instituting a ban on the cryptocurrency ATMs, Johnson said. “If you are not doing something that’s harming the people who live or work or play in Forest Lake, then you get to continue,” she said.
‘Tough to swallow’
In 2023 and 2024, residents reported losing $300,000 in scams involving cryptocurrency ATMs, and the majority of the victims were elderly, Olstad said.
“It’s tough to swallow when you know that money more than likely is not just not-recoverable — it’s out of the country,” he said.
Police have investigated a number of reports involving the Bitcoin Depot ATM at the Holiday Station at 1208 Broadway Ave. in Forest Lake.
In one case, a Forest Lake Police Department employee spotted a woman about to deposit $16,000 in cash into the Bitcoin Depot ATM.
The woman told police she was working on a laptop computer when a pop-up message appeared stating that she had a virus in her system and to call the provided phone number. Scammers convinced the woman that her computer had a virus related to child pornography and persuaded her to download an app onto her cell phone and then log into her U.S. Bank account.
They then persuaded her to withdraw all her money from U.S. Bank, go to the Bitcoin Depot ATM and deposit the money into a “safekeeping account” that they set up for her, the reports state.
Two other cities in Washington County also are working on measures to protect residents from scams involving cryptocurrency ATMs. Like Forest Lake, officials in Woodbury are considering an ordinance that would require the registration of the business that hosts the ATMs. The Stillwater City Council, meanwhile, is moving forward with a plan to ban crypto ATMs within city limits.
The Forest Lake City Council will vote on its proposed ordinance on Monday.
.png)
