Attorney General’s Lawsuit Against Athena Bitcoin
In a striking move, Attorney General Brian L. Schwalb of Washington, D.C., has filed a lawsuit against Athena Bitcoin, Inc., accusing the cryptocurrency ATM company of not only neglecting to safeguard elderly individuals from scams but also engaging in unfair business practices by failing to disclose exorbitant transaction fees. The complaint, which marks a significant legal action against the firm operating approximately 4,100 Bitcoin ATMs across five countries, cites two violations of the Consumer Protection Procedures Act and additional accusations of exploiting vulnerable adults, particularly the elderly.
Alarming Statistics and Allegations
The lawsuit’s allegations come amidst troubling statistics: within just five months of launching operations in the nation’s capital, a staggering 93% of the funds deposited into Athena’s machines were reportedly linked to fraudulent activities. A disturbing trend has emerged in 2023, as victims reported a combined loss of $189 million due to scams related to Bitcoin ATMs to the FBI. The FBI’s concerns underscore the rising problem of scammers utilizing Bitcoin ATMs to easily extract cryptocurrencies from unassuming victims, especially seniors unfamiliar with digital currencies.
Exorbitant Fees and Misleading Practices
Schwalb highlighted the egregious nature of Athena’s practices, noting that customers in D.C. were charged fees reaching as high as 26%, in stark contrast to the standard industry fees of around 3%, without any upfront disclosure. The lawsuit claims that these fees were masked within what the company misleadingly described as the “exchange rate” on their ATMs, with no detailed breakdown provided on receipts. In one shocking instance cited in the complaint, a customer was led to believe the price of Bitcoin was $80,300, resulting in a scammer pocketing $7,500 while Athena earned $2,500 in undisclosed fees from the transaction.
Refund Policies and Confidentiality Agreements
Furthermore, victims were often told that refunds were non-existent or heavily restricted, with the lawsuit revealing that any available refund was limited to $7,500. In return for this refund, customers were reportedly compelled to sign a confidentiality agreement, essentially waiving their rights to pursue further action against the company.
Broader Implications and Legislative Responses
The filing also sheds light on the broader implications of the tension that has surfaced between Bitcoin ATM operators and law enforcement. Recent court rulings have permitted firms like Bitcoin Depot, a competitor of Athena, to retain cash that victims attempted to retrieve, even as law enforcement worked to recover funds for scam victims. The Iowa Supreme Court referenced explicit warnings posted at Bitcoin Depot’s kiosks as contributing factors to the courts’ decisions.
U.S. Senator Dick Durbin, along with other lawmakers, has previously urged Bitcoin ATM operators to strengthen measures against exploitative practices targeting senior citizens. Meanwhile, there have been proposals from some conservative lawmakers advocating for educational initiatives surrounding Bitcoin ATMs, suggesting that placement in federal buildings could enhance public understanding and deterrence against scams.
Conclusion
As the lawsuit unfolds, the case against Athena Bitcoin could set a precedent in addressing and mitigating the risks faced by vulnerable populations in the evolving landscape of cryptocurrency.
