Bitcoin ATMs are a rapidly growing presence in the United States and, some experts say, a rapidly growing cybercrime menace. ATMs dealing in bitcoin are similar to their cash cousins: there are PINs to punch and withdrawal fees, just like any other ATM.
Unlike cash ATMs, though, the high value of crypto makes them prime targets for hackers. So, while a cash ATM tucked away between the snack cakes and energy drinks at a gas station may not draw much attention, a bitcoin ATM gets more scrutiny from bad actors.
“It’s clear that these machines are particularly vulnerable to both physical and cyber threats, making them a prime target for hackers and thieves,” said Timothy Bates, clinical professor of cybersecurityat the University of Michigan’s College of Innovation and Technology.
Bitcoin ATMs can be susceptible to attacks where hackers install malware on the machines to capture private keys, steal funds, or manipulate transactions, which Bates said is “especially concerning for ATMs that may not receive regular software updates or security patches.” Network vulnerabilities are also a weak spot. “If the machine’s network communications are not adequately secured, attackers can intercept data transfers between the ATM and the server, leading to data theft or unauthorized access,” Bates said.
Whether it’s hackers or scammers, the government is sounding the alarm about bitcoin ATMs. The Federal Trade Commission reported this week that scam incidents have risen by 1,000% since 2020.
Ironically, a bitcoin ATM’s risks are directly related to its strengths, according to Joe Dobson, principal analyst at Mandiant, a Google Cloud-owned cybersecurity company. Bitcoin is decentralized, permission-less, and immutable. “A transaction cannot be reversed or recalled if funds are deposited to the wrong address,” Dobson said. And while many crypto bulls find bitcoin’s lack of governance appealing, that can be problematic in ATMs. “There is no governing body within bitcoin dictating who can or cannot run a bitcoin ATM, hence many independent organizations operate the ATMs,” Dobson said.
There are also old criminal tricks that might be reversible in a traditional banking situation, but in the world of bitcoin, that is not so. For example, someone could maliciously slip their personal deposit slips into the stack at the bank, tricking folks into depositing money into their account. “A similar attack can happen with bitcoin ATMs,” Dobson said. “If an attacker compromises a bitcoin ATM, they may change the receiving wallet address (or ‘account number’), effectively stealing user funds.”
But in addition to old tricks, there are newer threats bitcoin ATMs introduce that cash ATMs do not face. Many bitcoin ATMs require personally identifiable information, such as an ID or even a Social Security number to comply with financial industry Know Your Customer (KYC) requirements. This information could be at risk if a bitcoin ATM is compromised.
In Middletown, Ohio, at the Middletown Food Mart in a hollowed-out end of town, a Bitcoin Depot ATM sits opposite a regular cash ATM, blending in among the potato chips, bottled water, and beer. Middletown’s claim to fame lately is as the hometown of Donald Trump’s running mate Ohio Senator J.D. Vance, who has refashioned himself, similar to Trump, as a pro-cryptocurrency warrior. The Middletown Food Mart sits across the street from where Vance grew up.
‘Elon Musk told me to do it.’
Sai Patel, whose family owns Middletown Food Mart, says the bitcoin ATM isn’t very busy.
“Maybe once a month someone comes in to use it,” Patel said. And if it is someone new, Patel will patiently explain how the machine works. He also keeps an eye out for unusual activity. Although the bitcoin ATM isn’t exactly drawing crowds, Patel says a surprising number of senior citizens show up at the kiosk, alarming given the rise of bitcoin ATM scams targeting seniors.
“Elderly people come in and use it,” Patel said.
He described one encounter where an elderly woman entered his shop and headed for the bitcoin ATM, then attempted to send a lot of money somewhere but had questions about using the machine. When Patel asked the woman a few questions as to why, she said, “Elon Musk told me to do it.” Patel quickly realized she had fallen prey to a scam. “I told her, no, no, no, it’s a scam,” Patel said, and he stopped her from dumping her life savings into the machine.
Alice Frei, head of security and compliance at blockchain communications & consulting agency Outset PR, says bitcoin ATM fraud is costly, enhanced by the sometimes shadowy world of crypto.
“Cryptocurrencies are easily exchanged online, often without clear identification of the parties involved. Criminals exploit this anonymity and move money almost invisibly, often employing techniques such as cross-blockchain ‘bridges’ to further obscure transactions,” she said.
And then there’s the fact that an ATM scam probably doesn’t originate in the town where it occurs. “Many crypto exchanges involved in these activities are based offshore, beyond the reach of regulators, making it difficult to trace and recover stolen funds,” Frei added.
Basic steps to avoid bitcoin ATM scams
To protect against these scams, users should be cautious and skeptical of any request to pay through a bitcoin ATM. Legitimate businesses rarely, if ever, demand payment in bitcoin through a machine.
“Verifying the legitimacy of a transaction, particularly checking the recipient’s wallet for connections to questionable entities is crucial,” Frei said, adding that users should also use licensed ATMs from reputable operators to reduce the risk.
Frei said there are steps that users can take to verify the ownership and legitimacy of a bitcoin ATM or parties involved in transactions.
“You can verify the recipient address by checking for flagged activity on platforms like Chainabuse and running an AML check on the address using available tools,” she said, If these tools show the risk score above 70%, it’s advisable to avoid sending money. “Instead, contact the ATM operator or the person who provided the address to clarify the situation,” Frei added.
According to Frei, data shows that nearly 74% of ATMs globally are managed by just 10 operators.
The largest operator of bitcoin ATMs, Bitcoin Depot, operates over 8,000 ATMs. Its CEO Brandon Mintz says the company’s machines are designed to deter hackers. But he also disputes the claims that bitcoin ATMs are major hacking targets.
“Bitcoin ATMs aren’t typically high-priority targets for cybercriminals due to the separation of the hardware and the bitcoin wallet environments,” Mintz said. Bitcoin Depot does not store any bitcoin locally at a bitcoin ATM, and there are many layers of verification and approval processes that prevent unauthorized access to the Bitcoin Depot wallet, he said.
Additionally, Mintz said, most bitcoin ATMs, including Bitcoin Depot’s, only accept cash, so this removes the ability for criminals to use card skimmers like they can install on traditional cash ATMs. However, he says users do need to be aware of scams, and some of the same basic protocols that protect consumers from old-fashioned financial scams apply to the world of cryptocurrency as well.
“Customers of bitcoin ATMs should never send bitcoin or other cryptocurrencies to unknown digital wallets or individuals they don’t know and trust. It’s important to remain vigilant and skeptical of anyone asking for cryptocurrency payments, especially if the request comes with a sense of urgency or threat,” Mintz said.
As the market leader, Bitcoin Depot has been a target of litigation and the company disclosed in its S-1 filing before going public that its users “have been and could be targeted in cybersecurity incidents like an account takeover.” A South Carolina woman sued Bitcoin Depot after falling victim to an alleged cryptocurrency scam. In another instance, authorities in Texas intervened to return money from a Bitcoin Depot ATM after a woman fell victim to a scam.
And that points to a central irony of bitcoin and the bitcoin ATM, products of technology, but ones where the most powerful weapon against fraud isn’t more technology but responsibility, Dobson said. “User responsibility is paramount in cryptocurrency. There is little recompense if something goes awry. The onus is largely on the user to take steps.”
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Markets: The S & P 500 bounced back Friday, recovering from the prior session’s sharp losses. The broad-based index, which was still tracking for a nearly 1.5% weekly decline, started off the session a little shaky as Club stock Nvidia drifted lower after the open. It was looking like concerns about the artificial intelligence trade, which have been dogging the market, were going to dominate back-to-back sessions. But when New York Federal Reserve President John Williams suggested that central bankers could cut interest rates for a third time this year, the market jumped higher. Rate-sensitive stocks saw big gains Friday. Home Depot rose more than 3.5% on the day, mitigating a tough week following Tuesday’s lackluster quarterly release. Eli Lilly hit an all-time high, becoming the first drugmaker to reach a $1 trillion market cap. TJX also topped its all-time high after the off-price retailer behind T.J. Maxx, Marshalls, and HomeGoods, delivered strong quarterly results Wednesday. Carry trade: We’re also monitoring developments in Japan, which is dealing with its own inflation problem and questions about whether to resume interest rate hikes. That brings us to the popular Japanese yen carry trade, which is getting squeezed as borrowing costs there are rising. The yen carry trade involves borrowing yen at a low rate, then converting them into, say, dollars, and investing in higher-yielding foreign assets. That’s all well and good when the cost to borrow yen is low. It’s a different story now that borrowing costs in Japan are hitting 30-year highs. When rates rise, the profit margin on the carry trade gets crunched, or vanishes completely. As a result, investors need to get out, which means forced selling and price action that becomes divorced from fundamentals. It’s unclear if any of this is adding pressure to U.S. markets. We didn’t see anything in the recent quarterly earnings reports from U.S. companies to suggest corporate fundamentals are deteriorating in any meaningful way. That’s why we’re looking for other potential external factors, alongside the well-known concerns about artificial intelligence spending, the depreciation resulting from those capital expenditures, and general worries about consumer sentiment and inflation here in America. Wall Street call: HSBC downgraded Palo Alto Networks to a sell-equivalent rating from a hold following the company’s quarterly earnings report Wednesday. Analysts, who left their $157 price target unchanged, cited decelerating sales growth as the driver of the rerating, describing the quarter as “sufficient, not transformational.” Still, the Club name delivered a beat-and-raise quarter, which topped estimates across every key metric. None of this stopped Palo Alto shares from falling on the release. We chalked the post-earnings decline up to high expectations heading into the quarter, coupled with investor concerns over a new acquisition of cloud management and monitoring company Chronosphere. Palo Alto is still working to close its multi-billion-dollar acquisition of identity security company CyberArk , announced in July. HSBC now argues the stock’s risk-versus-reward is turning negative, with limited potential for upward estimate revisions for fiscal years 2026 and 2027. We disagree with HSBC’s call, given the momentum we’re seeing across Palo Alto’s businesses. The cybersecurity leader is dominating through its “platformization” strategy, which bundles its products and services. Plus, Palo Alto keeps adding net new platformizations each quarter, converting customers to use its security platform, and is on track to reach its fiscal 2030 target. We also like management’s playbook for acquiring businesses just before they see an industry inflection point. With Chronosphere, Palo Alto believes the entire observability industry needs to change due to the growing presence of AI. We’re reiterating our buy-equivalent 1 rating and $225 price target on the stock. Up next: There are no Club earnings reports next week. Outside of the portfolio, Symbotic, Zoom Communications , Semtech , and Fluence Energy will report after Monday’s close. Wall Street will also get a slew of delayed economic data during the shortened holiday trading week. U.S. retail sales and September’s consumer price index are scheduled for release early Tuesday. Durable goods orders and the Conference Board consumer sentiment are released on Wednesday morning. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Mug shot of Eric Gillespie, Govini Founder and Chairman.
Courtesy: Pennsylvania Attorney General
Govini founder Eric Gillespie, who is charged with four felonies, including multiple counts of unlawful contact with a minor, was released on bail.
Gillespie, who lives in Pittsburgh, posted a $1 million bond after his court appearance Thursday. He is not allowed to travel, and his passport has been revoked.
He was initially denied bail following his arrest on Nov. 7, with the judge citing flight risk and public safety concerns.
David Shrager of Shrager Defense Attorneys, who represents Gillespie, insisted that his client did not break any laws.
“Mr. Gillespie has never contacted a minor, either online or in person, and the facts clearly prove that,” Shrager said after the hearing on Thursday.
“Completely false statements, including the use of artificial intelligence between adults made in the context of an online fantasy chat, are not illegal,” he added.
The Pennsylvania Attorney General’s Office said Gillespie sent lewd photos to an agent posing as a father offering his daughter to be abused, and made graphic comments about sexual acts with children.
Gillespie, 57, commented on the security of the encrypted platforms being used in the chats between him and the undercover agent, according to a criminal complaint obtained by CNBC.
Gillespie is the founder of defense contractor Govini.
He was listed on the company’s website on the leadership page as a board member as recently as Aug. 17, according to an archived version of the page available on the Wayback Machine.
Earlier this year, Govini landed a nearly $1 billion contract with the Department of Defense. The company’s suite of artificial intelligence-enabled applications is used by every department of the U.S. military and other federal agencies.
Following his arrest, Pentagon officials said they were looking into Gillespie and possible security issues.
CNBC has repeatedly asked the Department of Defense about updates on the status of the probe and potential security concerns with Govini or Gillespie.
“We don’t comment on ongoing investigations,” a Pentagon spokesperson said Thursday.
The chip giant’s talismanic leader trumpeted “off the charts” chip sales and dismissed talk of an “AI bubble,” and for a while, the tide lifted all boats.
“There’s been a lot of talk about an AI bubble,” Huang said during an earnings call this week. “From our vantage point, we see something very different.”
The buzz from the blowout report quickly reversed, sending the AI winners deeply into the red — and few beneficiaries were left unscathed.
Every member of the Magnificent 7, except for Alphabet, was tracking for a losing week, with Nvidia, Amazon and Microsoft staring down the biggest losses.
Amazon and Microsoft have led the group’s drop lower, falling about 6% this week. Meanwhile, Alphabet has gained nearly 8%. The search giant is also the only megacap of the group on pace for November gains thanks to a boost from the launch of Gemini 3.
Oracle, which is another major Nvidia customer, slumped about 10%. The chipmaker also supplies major model developers such as OpenAI and Anthropic.
CoreWeave, which buys and rents out Nvidia’s chips in data centers, initially soared on the chipmaker’s earnings report, but swiftly reversed course. The company’s stock is looking at an 8% blow this week.
AI fever was cooling in the runup to Nvidia’s earnings report on Wednesday, and investors looked to the print to alleviate fears that the AI bubble was on shaky ground. Since the launch of ChatGPT in late 2022, the stock has helped power the market to new all-time highs.
Major investors, including Bridgewater’s Ray Dalio told CNBC Thursday that the market is definitely in a bubble.
Much of the worries have stemmed from a boom in capital expenditures spending to support AI, with few signs of a payoff in view for many of the players.
Investor Michael Burry recently accused some of the biggest cloud and infrastructure providers of understating depreciation expenses and estimating a longer life cycle for their chips, calling it “one of the more common frauds of the modern era.”
Shares of the software analytics company, which supplies AI tools to the government and businesses, are down 11% this week. The stock has shed nearly a quarter of its value this month.
