Illegal Crypto ATMs on the Rise: UK Records First-Ever Offense
The UK recorded its first criminal prosecution against an unregistered crypto ATM operator. (Photo by Derek Davis/Staff photographer)
- UK records its first criminal prosecution against an illegal crypto ATM operator.
- A 2020 ruling requires crypto service providers to register with the FCA, but crypto ATMs have only approached the regulator in the past four years.
- Law enforcement agencies across the world have warned against crypto ATM use.
Illegal crypto ATMs are on the rise worldwide, with the most recent case coming from the United Kingdom.
The Financial Conduct Authority (FCA), the UK’s financial watchdog, recorded its first criminal prosecution against an unregistered crypto ATM operator.
FCA Charges 45-Year-Old Under MLR
In a statement on Sept. 10, FCA notified that the agency charged 45-year-old London resident Olumide Osunkoya for illegally operating multiple crypto ATMs without the required registration.
Osunkoya reportedly operated multiple crypto kiosks that processed £2.6 million between 29 Dec. 2021 and 8 Sept. 2023.
Therese Chambers, joint director of enforcement and market oversight at the FCA, warned the common public about interacting with crypto ATMs and said:
“Our message today is clear. If you’re illegally operating a crypto ATM, we will stop you. If you’re using a crypto ATM, you are handing your money directly to criminals. Criminals can exploit crypto ATMs to launder money globally.”
The FCA warned that there are no legal crypto ATMs in the UK.
A 2020 law requires crypto service providers dealing with crypto transactions to register with the FCA. However, no crypto ATMs have registered with the authority over the past four years.
The charges against Osunkoya represent the agency’s first criminal prosecution related to crypto under the 2017 Money Laundering, Terrorism Financing, and Transfer of Funds Regulations (MLRs).
Crypto ATM Fraud Rate Double Than the Crypto Industry
The installment of crypto ATMs is on the rise worldwide; however, so are crimes associated with them.
Over the past year, multiple law enforcement agencies across various countries have cracked down on illicit crypto kiosks operating in the region.
According to a TRM report , cryptocurrency ATMs have been used to launder at least $160 million since 2019. Crypto transaction machine-linked Illicit activity in the cash-to-crypto sector accounted for 1.2% of total crypto volume last year.
Crypto ATMs allow people to exchange cash for a crypto of their choice, and in some cases, they also allow crypto holders to sell their crypto assets for cash. Proponents call it an easy onboarding tool, but financial regulators worry about the anonymity factor.
Regulators around the globe have warned against crypto ATMs and their potential use for money laundering by bad actors.
In August, German authorities raided 35 locations nationwide and seized 13 illegally operating crypto ATMs. They also confiscated a quarter of a million euros ($278,000) from these ATMs.
Conversely, Australia has also emerged as a hot spot for crypto ATM operators in the last couple of years, recording a tenfold jump in the number of crypto kiosks nationwide. Australian regulators have regularly warned against the illicit use of crypto ATMs for money laundering.
Countries like Singapore and the UK have banned crypto ATM use, while countries like Germany have stringent regulatory licensing policies for crypto kiosk operators.
