Investigations by the Murfreesboro Police Department revealed millions of dollars lost in Bitcoin ATM scams, helping lead to Tennessee’s new statewide ban.
The Tennessee General Assembly approved House Bill 2505, which took effect July 1, making Tennessee the second state in the nation to completely ban virtual currency kiosks. Indiana is the only other state with a similar statewide ban.
Murfreesboro police investigators provided data showing victims in the city lost nearly $4.1 million over a six-month period through Bitcoin ATM scams. Fraud Detective Sgt. Tommy Massey and the department’s Fraud Unit uncovered cases where scammers impersonated law enforcement officers, threatened victims with fake warrants and instructed them to withdraw money and deposit it into Bitcoin machines.
Massey said once money is transferred into a cryptocurrency wallet, recovering the funds is extremely difficult. He also noted that many Bitcoin ATMs charge fees of up to 40% for converting money into cryptocurrency.
Around 30 businesses in Murfreesboro currently have Bitcoin ATMs, and police said officers will visit those locations to educate owners and ensure compliance with the new law. Businesses that knowingly install, operate or allow the use of virtual currency kiosks could face a Class A misdemeanor, punishable by up to 11 months and 29 days in jail and a fine of up to $2,500.
Tennessee Attorney General Jonathan Skrmetti said a federal court recently allowed the ban to take effect while a legal challenge from the cryptocurrency ATM industry continues.
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