Lewis Bell can still recall the emotional toll of his former role assisting customers of Localcoin, Canada’s largest crypto ATM company. Working remotely from Toronto, Bell spent three months fielding support calls, many of which were from individuals who had fallen victim to scams. Providing them with the heartbreaking news that their losses were irrecoverable weighed heavily on Bell, especially when considering the significant sums involved, sometimes representing individuals’ life savings.
According to a recent investigative report, these distressing scenarios are not isolated incidents. Former employees from various crypto ATM companies in Canada have corroborated that fraudulent activities are a pervasive issue within the industry. Some employees even suggested that a portion of their employers’ profitability may stem from transactions linked to fraudulent activities.
Despite these claims, major operators like Localcoin have insisted that they neither seek nor benefit from fraudulent transactions. They maintain that anti-fraud measures are in place to detect and deter illicit activities. However, opinions within the industry vary, with some experts, like Marc Grens, arguing that the existence of these companies is intrinsically tied to illicit practices.
Grens, a co-founder of a U.S.-based crypto ATM business, shuttered his operation due to the overwhelming prevalence of fraud. He highlighted the challenges of maintaining ethical standards in an industry driven by profit margins heavily influenced by fraudulent transactions.
While crypto ATMs offer a convenient way to access and trade cryptocurrencies, they come with steep fees, sometimes as high as 30%. This has raised concerns among law enforcement officials, such as Toronto police detective David Coffey, who questions the legitimacy of these services based on their fee structures.
Despite these criticisms, operators like HODL Digital Services assert that the majority of their transactions are small and legitimate, catering to individuals looking for convenient access to cryptocurrencies. They emphasize their commitment to combatting fraud through stringent anti-money laundering measures that go beyond regulatory requirements.
As the debate around the ethics and profitability of crypto ATMs continues, industry players grapple with the delicate balance between financial viability and ethical responsibility. The forthcoming conclusion of the investigative series promises to delve deeper into the regulatory landscape surrounding crypto ATMs in Canada and the ongoing efforts to combat fraud within the industry.
