Are BTMs Really “Big Time Magnets” for Criminal Activity? (Part 2)

How Coin Cloud Prevents Crime at Digital Currency Kiosks
Coin Cloud Team
, published on 
May 13, 2020
Are BTMs Really “Big Time Magnets” for Criminal Activity? (Part 2)

In Part 1 of this article, we were speaking with Raquel Shingleton, VP of Compliance and Chris McAlary, CEO of Coin Cloud, about criminal activity at Bitcoin ATMs.

We ended off with:

“We see all walks of life at our machine. What is sort of counterintuitive is that most people perceive the Bitcoin user to be a young, tech-savvy male who is an early adopter,” McAlary explains. “That's widely true of Bitcoin usage generally. But in terms of who is actually using the Bitcoin ATM product, it actually skews older and female because we think that user base actually finds more familiarity and convenience as their top priorities when using Bitcoin.”

“My grandma doesn't want to set up an online cryptocurrency brokerage account. She wants to access the Bitcoin but she just doesn't want to go through that process and our product makes that very, very easy,” he continues. “It's not only for the young, tech savvy people, it's for everybody.”

But again, if it’s so easy and appealing to novices, why wouldn’t criminals want to take advantage of that? After all, naïve tech-phobes are often the target of dark web scams.

Unparalled Customer Service

“Well, we have limits in place that prompt our customers,” says Shingleton. “This could be first-time customers that have never used our kiosk or it could be a repeat customer. We prompt them to call and speak with a member of our customer support team. This department is trained on how to speak with our customers to identify if they're doing a transaction on their own behalf or somebody prompted them to use our kiosk, and we will deny a transaction if we suspect the customer is the victim of a crime or a victim of a scam.”

They field 300-400 such calls every day. To date, the Coin Cloud team has been able to save almost $300,000 in scam money and provide those funds back to the customer.

Robust Compliance Software

“Our software will also detect when there are anomalies,” Shingleton adds, like when multiple people are trying to use the same account, or the same ID is being used on different accounts. “All of this is reviewed by a member of our Compliance Team, and accounts will be blocked from further use if detected.”

McAlary notes, “These things started coming up and our team reacted really fast to the situation and put these in place, and I'm proud to say that we've seen a significant decline.” He hopes the scammers have gotten discouraged enough to give up on using BTMs altogether, but they could have gone to other BTM operators who don’t have such strict procedures in place. Either way, as the Coin Cloud network grows, the goal is to help push illicit activity completely out of the system.

“You just hear those bad stories because bad stories make for a good read, and so then you just associate Bitcoin with anything negative. And as people find out, as it becomes more mainstream, as people become more aware and they actually use the services, they realize that it's not the Wild Wild West,” he says.

Consumer Education

Of course, educating the world about the security of cryptocurrency will take some time to complete. But it’s happening. “I have always been a big supporter for transparency and open communication, and this has definitely been welcomed by law enforcement,” Shingleton emphasizes. “At the end of the day, we just want to help them catch the bad guys and take them out of commission.”

And keeping criminal activity at only 1% shows how well that goal is being accomplished. “(It) reinforces our commitment to ensure our kiosks aren't being used by illicit actors trying to do something illegal, whether it be money laundering, scams, using funds for terrorist financing or dark net activity,” confirms Shingleton.

“Other comparable online exchanges are at around 3%. And so, we're really proud that ours is below even the industry average. But 3% is still an impressive number and sort of flies in the face of the popular reporting that goes around that says Bitcoin is only used for illicit activity.” McAlary adds. “I expect that number to get smaller and smaller just as we shut down these illicit addresses and we shut down these illicit actors, and more and more people are educated that if you're going to be doing criminal activity, Bitcoin's a really bad tool to use for it because it's going to point back to you.”

Disclaimer: The information and views supplied on the Coin Cloud blog are for educational and entertainment purposes only. We are not financial advisors, so please do your research and consult with a trusted financial specialist before investing your money.

What is Coin Cloud?

Founded in 2014 in Las Vegas, Nevada, Coin Cloud is the leading digital currency machine (DCM) operator. With over 4,500 locations nationwide, in 48 states and Brazil, Coin Cloud operates the world’s largest and fastest-growing network of 100% two-way DCMs, a more advanced version of the Bitcoin ATM. Every Coin Cloud DCM empowers you to quickly and easily buy and sell over 40 cryptocurrency options with cash.

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