Greg's Corner

Tennessee Targets Crypto ATM Scams

By Greg Collier

For years, scam victims have been told to buy gift cards, wire money overseas, or send payments through cash transfer services. More recently, another payment method has become a favorite among fraudsters: Bitcoin ATMs.

Now, Tennessee has decided the problem has become too big to ignore.

Beginning July 1, Tennessee will become the second state in the country to ban cryptocurrency ATMs outright. The move follows similar action in Indiana, which became the first state to prohibit the machines earlier this year.

Supporters of the law say the machines have become a major vehicle for fraud, particularly against older adults and other vulnerable populations.

Why Scammers Love Bitcoin ATMs

Bitcoin ATMs themselves are not scams. They allow users to convert cash into cryptocurrency.

The problem is that scammers have figured out they are one of the fastest ways to get money from victims while making recovery nearly impossible.

According to fraud experts quoted in the Tennessee report, scammers often stay on the phone with victims the entire time. They direct them to their bank, tell them to withdraw cash, and then instruct them to drive to a gas station, convenience store, or other location with a cryptocurrency kiosk.

The victim is then told to feed cash into the machine and send the cryptocurrency to a wallet controlled by the scammer.

Once the transaction is completed, the money is usually gone.

Law enforcement officials say tracing the funds can be extremely difficult because the cryptocurrency often moves through multiple exchanges before reaching its final destination.

The Scams That Commonly Lead Victims to Bitcoin ATMs

One thing many of these schemes have in common is fear.

Scammers create a fake emergency and convince victims that immediate action is required.

Some of the most common scams involving Bitcoin ATMs include:

Government Impersonation Scams
The scammer pretends to be from the IRS, Social Security Administration, or another government agency and claims the victim owes money or faces arrest.

Law Enforcement Scams
Fraudsters pose as police officers, federal agents, or court officials and tell victims there is a warrant for their arrest unless they make an immediate payment.

Tech Support Scams
Victims receive pop-up messages or phone calls claiming their computer has been hacked. The “technician” then convinces them to protect their money by transferring it through a Bitcoin ATM.

Bank Fraud Scams
Scammers claim the victim’s account has been compromised and instruct them to move their money to a “safe” account through cryptocurrency.

Romance Scams
Fraudsters build online relationships and eventually convince victims to send money through cryptocurrency because it is supposedly faster or safer.

These scams work because most victims have never used cryptocurrency before. They assume the machine functions like a traditional ATM and do not realize that cryptocurrency transactions are largely irreversible.

What’s Going On in Tennessee?

According to the Tennessee Elder Justice Coalition, approximately $10 million was lost through cryptocurrency ATM scams in Tennessee during 2025 alone.

Supporters of the ban argue that the machines provide little legitimate benefit while creating enormous opportunities for fraud.

The new law will make it illegal to install, operate, or host cryptocurrency kiosks in Tennessee beginning July 1. Businesses that fail to remove them could face criminal penalties.

The goal is not to ban cryptocurrency itself. Residents can still buy and sell cryptocurrency through other methods. The law specifically targets the physical kiosks that scammers frequently use to collect money from victims.

Will the Ban Actually Stop the Scams?

That remains to be seen.

One concern raised in the report is that scammers may simply adapt.

Fraudsters are incredibly resourceful when it comes to finding ways around obstacles. Experts interviewed for the story noted that criminals could simply direct victims who live near state borders to drive into neighboring states such as Kentucky, Alabama, or Georgia, where cryptocurrency kiosks remain available.

In other words, removing the machines may make scams more difficult, but it may not eliminate them entirely.

As we’ve seen with gift card scams, wire transfer scams, and payment app scams, fraudsters rarely abandon a successful scheme. They simply change their instructions.

Red Flags

Be extremely suspicious if someone:

• Tells you to withdraw cash from your bank account.
• Stays on the phone while directing your actions.
• Claims your money is at risk and must be moved immediately.
• Demands payment through cryptocurrency.
• Directs you to a Bitcoin ATM.
• Claims you must act immediately to avoid arrest, account closure, or legal trouble.
• Tells you not to speak with family members, bank employees, or law enforcement.

Legitimate businesses, government agencies, and law enforcement officers do not demand payment through Bitcoin ATMs.

Quick Tip: If someone tells you to put cash into a Bitcoin ATM to solve a problem, stop immediately. No matter what story they are telling you, whether it involves taxes, a hacked bank account, a warrant, or a computer virus, it is almost certainly a scam.

What You Can Do

• Hang up on unsolicited callers demanding payment.
• Contact the organization directly using a verified phone number.
• Speak with a trusted family member or friend before sending money.
• Ask your bank if the request sounds legitimate.
• Report suspected scams to law enforcement and the FTC.
• Remember that urgency is one of a scammer’s most powerful weapons.

Final Thoughts

Tennessee’s ban on Bitcoin ATMs reflects a growing recognition that these machines have become a preferred payment method for scammers.

The state may remove the kiosks, but scammers are unlikely to disappear. As the article itself points out, fraudsters may simply redirect victims to machines in neighboring states or switch to another payment method entirely.

The real solution remains the same as it has always been: education.

Because regardless of whether scammers ask for gift cards, wire transfers, cryptocurrency, or the next payment method they invent, the warning sign is always the same.

Someone is demanding money immediately and telling you not to stop and think.