Washington, D.C., Attorney General Brian L. Schwalb filed a lawsuit against Athena Bitcoin, Inc. on Monday, alleging that the Bitcoin ATM operator has been neglecting scams targeting elderly residents and failing to disclose excessive fees.
The company, which operates 4,100 Bitcoin ATMs across five countries, has been accused of violating the Consumer Protection Procedures Act through deceptive practices and financial exploitation of vulnerable adults and the elderly.
Athena’s stock saw a rise of 8.5% to $0.02 on Monday, but the company’s stock price has dropped by 83% since the beginning of the year, according to Yahoo Finance.
Bitcoin ATMs provide customers with the ability to exchange cash for cryptocurrency, making them a target for scammers due to the irreversible nature of crypto transactions. Many victims of these scams are unfamiliar with how cryptocurrencies operate.
According to a 30-page complaint, within the first five months of operating in Washington, D.C., 93% of funds deposited into Athena’s kiosks were found to be the result of fraudulent activities. In 2023, Americans reported losses of $189 million from scams involving Bitcoin ATMs to the FBI.
Schwalb’s lawsuit alleges that Athena has been charging customers fees as high as 26%, without disclosing these fees upfront. The lawsuit claims that Athena’s markup is hidden within the ‘exchange rate,’ and customers are not made aware of the fees.
Receipts from Athena machines do not detail the fees charged, leaving customers unaware of the excessive markup. The lawsuit also states that the fees charged by Athena increase based on the size of the customer’s order.
Athena allegedly informed customers that refunds were not available, and if offered, were capped at $7,500. Customers were required to sign a confidentiality agreement releasing Athena from any future legal liability.
The lawsuit highlights the ongoing conflict between Bitcoin ATM operators and law enforcement, with authorities resorting to drastic measures to retrieve funds from kiosks for victims. However, courts have ruled in favor of the operators in some cases.
Schwalb argues that the language displayed on Athena’s kiosks does not effectively prevent scams, especially when scammers coerce victims to disregard warnings and instructions.
U.S. Senator Dick Durbin has called on Bitcoin ATM operators to combat illicit activities targeting the elderly. Progressive lawmakers have advocated for stricter regulations, while conservatives have proposed using Bitcoin ATMs in federal buildings to promote education.