Missouri Attorney General Catherine Hanaway has announced a statewide investigation into companies operating cryptocurrency kiosks, citing national concerns about deceptive fee structures and the use of these machines by scammers to defraud consumers.
The Attorney General's Office has issued Civil Investigative Demands (CIDs) to five major Bitcoin ATM operators doing business in Missouri. These demands require companies to provide documentation about their business practices and disclose their anti-fraud policies and procedures.
"We have received reports of devastating new scams involving the use of Bitcoin ATMs to prey on Missourians. Our Office is investigating concerning allegations regarding hidden fees and deceptive charges on these machines and will hold bad actors accountable."
- Attorney General Catherine Hanaway
Companies Under Investigation
The following five operators have received Civil Investigative Demands:
All five companies own and operate numerous cryptocurrency kiosks across Missouri. These machines function similarly to traditional ATMs but allow consumers to transact in cryptocurrency like Bitcoin rather than U.S. dollars.
Concerns Raised by the Investigation
The Attorney General's announcement highlights several key concerns about Bitcoin ATM operations:
Key Allegations:
- Disproportionate fees - Transactions on cryptocurrency kiosks are often accompanied by fees that may not be clearly disclosed
- Poor fee disclosure - Consumers may not fully understand the costs before completing transactions
- Nonrefundable transactions - Unlike traditional banking transactions, cryptocurrency transfers cannot be reversed
- Difficult to trace - The nature of cryptocurrency makes scam transactions hard to track and recover
- Preferred by scammers - These characteristics make Bitcoin ATMs a favored payment method for fraudsters targeting vulnerable populations
Context: Growing Regulatory Scrutiny
Missouri's investigation follows a wave of state-level regulatory actions against Bitcoin ATM operators. Iowa Attorney General Brenna Bird has already filed lawsuits against Bitcoin Depot and CoinFlip, alleging over $20 million in consumer losses and hidden fees exceeding 20%.
This investigation is notable for its breadth, targeting five of the largest operators in the industry simultaneously. It also represents the first significant regulatory action against RockItCoin, which previously maintained a clean compliance record, and Byte Federal, one of the industry's newer operators.
Missouri's Existing Regulatory Framework
Missouri already has consumer protection laws applicable to cryptocurrency kiosks under RSMo 361.1100 (the Virtual Currency Kiosk Consumer Protection Act). The state legislature is also considering HB3043, which would authorize the Attorney General to bring civil actions against operators found in violation of consumer protection laws.
How Scams Work at Bitcoin ATMs
The Attorney General's office is encouraging consumers to be aware of common scam tactics involving Bitcoin ATMs:
Warning Signs of Bitcoin ATM Scams:
- Someone calls claiming you're in legal trouble and must pay immediately via Bitcoin ATM
- A "government agency" demands immediate payment in cryptocurrency
- You're told you'll face criminal charges unless you pay at a Bitcoin ATM
- Any request for payment via cryptocurrency from an unsolicited caller
Important: Legitimate government agencies, law enforcement, and businesses never demand payment via Bitcoin ATM. If you receive such a request, it is a scam.
What Consumers Should Do
Missourians who believe they have been harmed by or through the use of any cryptocurrency kiosk are encouraged to file a complaint with the Missouri Attorney General's Office:
- Phone: 800-392-8222
- Website: ago.mo.gov
Industry Response
The investigation is ongoing, and the affected operators have not yet issued public responses to the Civil Investigative Demands. As these are preliminary investigative demands rather than lawsuits, the companies are being given the opportunity to provide documentation and explain their practices before any formal charges are filed.
BitcoinATM.news will continue to monitor this developing story and provide updates as more information becomes available.