Paws off our savings! The crypto scam preying on vulnerable seniors

In the serene coastal paradise of Hilton Head, South Carolina, where the Spanish moss whispers tales of Southern charm and the tides echo a rhythm of tranquility, a storm of a different nature is brewing.

The affluent seniors of this idyllic community, many of whom have spent their lives working diligently to enjoy a peaceful retirement, are now facing an unexpected adversary–crypto scammers.

The GrayVine is here to shed light on this alarming trend and offer guidance to our readers on how to safeguard their hard-earned wealth against these digital-age bandits.



Marianne, a 66-year-old retired health care worker, was looking forward to a breakfast with friends when her phone rang with a call that would lead her down a harrowing path.

The voice on the other end claimed to be from the Beaufort County Sheriff’s Office, accusing her of contempt of court for missing jury duty and threatening jail time.

The caller connected her to his supervisor who said that she could pay a $7,500 bond to secure her freedom until the court date.

Despite initial doubts, Marianne withdrew the cash and deposited it into a Coinstar ATM, which converted her funds into cryptocurrency and sent them straight to the scammer's digital wallet.


compressed-eduardo-soares-utWyPB8_FU8-unsplash.jpeg
Seniors in South Carolina have become targets for cryptocurrency scams. Image source: Eduardo Soares / Unsplash.



It was only after the scammer greedily requested an additional $3,000 that Marianne's suspicions led her to discover the truth: she had been scammed. “Oh, my God,” she said. “They got me. Doggone them.”

From Keystone, Colorado, to Sandy Springs, Georgia, law enforcement agencies are warning about these impersonators who prey on the fear of legal repercussions to swindle victims out of their savings.

The United States is home to roughly 30,000 bitcoin ATMs (BTMs), according to Coin ATM Radar. Bitcoin Depot, the largest BTM operator in North America, has kiosks in 48 states and is continuing to expand.

These machines, often found in grocery stores or gas stations, offer a convenient way for individuals to buy cryptocurrency. However, they have also become a tool for fraudsters.



Companies like Coinstar and Bitcoin Depot, which operate these kiosks, claim to be “committed to consumer protection,” displaying on-screen warnings and requiring multi-factor authentication. Yet, scammers continue to refine their tactics, and the elderly remain particularly vulnerable.

In Beaufort County alone, residents reported over $3.1 million in losses from crypto scams last year. The Federal Trade Commission data reveals that people 60 and older are more than three times likelier to report being scammed at bitcoin ATMs.

The impact of these scams on seniors is devastating. Eric Calendine, a lieutenant with the Beaufort County Sheriff’s Office, recounted a retired couple who lost almost $390,000, believing they were protecting their savings by depositing them at BTMs.


Source: FOX 5 New York / Youtube.​


In response to the growing threat, some advocates are urging legislators to address the issue. Senator Dick Durbin and other senators have reached out to companies running crypto ATMs, inquiring about their fraud prevention measures.

But as Trump’s administration continues to welcome cryptocurrency as part of boosting the industry, advocates express the need to heighten consumer protection.

“The problem is already there, but it can certainly get bigger over time,” expressed Carri Grube Lybarker, administrator of the South Carolina Department of Consumer Affairs. “And the longer we wait, we’re concerned the more folks will lose their hard-earned money.”

States like California, Minnesota, and Vermont have already implemented restrictions, and others are considering similar measures.



Eric Calendine, a lieutenant with the Beaufort County Sheriff’s Office, expressed that one of the worst cases he has seen was a retired couple that was duped for months into believing that they were protecting their savings by depositing them at BTMs.

The couple ended up losing $390,000 after going to several ATMs in Savannah, Georgia and Beaufort County.

The Federal Trade Commission has reported that scam-related losses from crypto kiosks increased from $12 million in 2020 to $114 million in 2023.

Most victims are unaware that the “warrant numbers” they are provided for “missing jury duty” or the QR codes they’ve been given to scan at the machines are usually the scammers virtual wallets.


compressed-christian-langballe-3I0X0owZS7M-unsplash.jpeg
The scammers use various tactics, such as impersonating law enforcement officers, to convince victims to pay fines or avoid arrest by depositing money into bitcoin ATMs. Image source: Christian Langballe / Unsplash.



Once the money reaches the scammer, it can be almost impossible for the funds to be recovered–even if the authorities can track where they are.

AARP’s fraud hotline receives reports everyday about scams involving BTMs, said Amy Nofziger, director of victim support for the fraud watch network at the organization.

One such victim, an 80-year-old retired banker from Beaufort County, found himself ensnared in a scam that cost him a staggering $31,000 in September.

The man, who requested anonymity due to safety concerns, was lured into the trap when a fake Microsoft warning popped up on his computer.



In a series of manipulative transfers, he was convinced by someone posing as a special investigator with the Social Security Administration that his arrest was imminent due to alleged illegal activity.

The scammer's solution? To withdraw his money and convert it into Bitcoin to keep it out of the hands of the so-called “bad guys.”

Driven by fear and a sense of urgency, the man followed the scammer's instructions to the letter. He lied to his bank about needing the money for building repairs, withdrew the cash, and drove to a liquor store with a Bitcoin ATM.

There, he fed his hard-earned money into the machine, bundle by bundle, unaware that he was being swindled.

Also read: Don’t fall for this costly scam: How a “compromised device” alert stole $45,000 from a couple!

The aftermath of the scam left him shifting between shame and anger, especially since the stolen funds included his significant other's earnings from her nursing shifts.

With 11 grandchildren between them, the couple's loss was more than financial; it was a blow to their family's future. But the question remains: who can they go after to reclaim their stolen savings?

Law enforcement is grappling with the same issue. Detective Nezar Hamze of the Anderson County Sheriff’s Office in South Carolina explains that while it's possible to trace stolen money if a victim has a receipt from a Bitcoin ATM with a wallet address, the process is fraught with challenges.

Many cryptocurrency exchanges are based overseas and are not obligated to cooperate with US authorities, often responding with what Hamze describes as “the virtual middle finger.”



In response to the growing number of victims, legislators in several states are introducing bills to limit the damage, such as capping daily deposits or mandating refunds in certain cases.

However, these proposed regulations face pushback from companies that argue they could lead to transactions being spread across multiple machines, complicating the issue further.

Victims are also seeking justice through the courts. Glenda Mooneyham, a 74-year-old widow, filed a federal lawsuit against Bitcoin Depot and Circle K, the hosts of the Bitcoin ATM (BTM) she used.

Her daughter, Stacie Sox, recounts the distressing scene of her mother feeding $15,000 into the machine, her anxiety palpable as she sat on a stool in the gas station.

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Bitcoin Depot, while not commenting directly on the lawsuit, stated that it has worked to promote responsible legislation for the Bitcoin ATM industry, focusing on compliance, anti-fraud measures, and consumer privacy.

In court filings, the company argued against liability, citing the warnings that users must click through before using the ATM.

As members of The GrayVine community, we must remain vigilant and informed. Here are some steps to protect yourself from crypto scams:

1. Be skeptical of unsolicited calls, especially those invoking legal threats or demanding payment in cryptocurrency.
2. Verify any such claims by contacting the relevant authorities directly using official contact information.
3. Educate yourself and your loved ones about cryptocurrency and the potential risks associated with BTMs.
4. Advocate for better regulation and consumer protection measures in your community.

To learn more about the ongoing scams that you need to watch out for, you can read more in our Scam Watch forum. Stay safe, GrayViners!

Key Takeaways
  • Seniors in South Carolina have become targets for cryptocurrency scams, with increasing cases reported where they are being deceived into converting cash into digital currencies at bitcoin ATMs.
  • The scammers use various tactics, such as impersonating law enforcement officers, to convince victims to pay fines or avoid arrest by depositing money into bitcoin ATMs.
  • In Beaufort County alone, residents have reported $3.1 million in losses from crypto scams last year, prompting local law enforcement and the AARP to advocate for tighter regulation of cryptocurrency kiosks.
  • As the number of bitcoin ATMs grows across the United States, there is a push for legislative action to limit transaction amounts and implement stronger consumer protection measures at cryptocurrency kiosks.

Have you or someone you know encountered a crypto scam? What measures have you taken to protect your financial security in the digital age? Share your experiences and tips in the comments below!
 

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