Washington, D.C., Attorney General Brian L. Schwalb unveiled a lawsuit against Athena Bitcoin, Inc., on Monday, accusing the Bitcoin ATM operator of consistently ignoring scams targeting elderly residents and failing to disclose excessive fees.
The firm, which operates 4,100 Bitcoin ATMs in five countries, was charged with two counts of violating the Consumer Protection Procedures Act through deceptive and unfair trade practices. Athena was also charged with the financial exploitation of vulnerable adults and the elderly.
Athena’s stock, which trades over-the-counter, rose 8.5% to $0.02 on Monday, according to Yahoo Finance. The company’s stock price has plummeted 83% year-to-date.
Decrypt has reached out to Athena for comment.
Bitcoin ATMs allow customers to exchange cash for crypto, and they are frequently used by scammers as a way to collect payouts from victims because of the irreversible nature of crypto transactions. Their targets often know little about how cryptocurrencies work.
In its first five months of operation within the nation’s capitol, 93% of funds deposited into Athena’s kiosks were “the product of outright fraud,” according to a 30-page complaint. In 2023, Americans reported $189 million in losses from scams involving Bitcoin ATMs to the FBI.
Some crypto exchanges charge users as much as a 3% fee to buy Bitcoin, but Schwalb’s lawsuit alleges that customers in D.C. have been charged fees of up to 26%, “without ever disclosing those fees to the consumer.”
“Athena’s markup is hidden within a fee-inclusive price that Athena misleadingly displays as the ‘exchange rate,’” the lawsuit claims, noting that the fee isn’t mentioned on Athena’s website.
In one instance, a victim was allegedly charged as if Bitcoin was trading at $80,300 per Bitcoin, when the asset was changing hands at about $60,000. That meant a scammer walked away with around $7,500 from a customers’ transaction, while Athena pocketed $2,500 in fees.
Receipts from Athena machines additionally do not itemize fees, allegedly leaving “consumers with no clear idea of the exorbitant markup they were charged.” The prosecutor determined that the fee Athena charges actually increases, allegedly, in relation to a customer’s order size.
Although Athena charged customers fees, it allegedly told customers that refunds aren’t available. If one was offered, it was allegedly capped at $7,500—and customers are required to sign a confidential release that frees Athena from future legal liability.
Schwalb’s lawsuit echoes the tension between Bitcoin ATM operators like Bitcoin Depot and local law enforcement. Authorities have resorted to brute force in some cases to retrieve victims’ funds from kiosks, only for courts to determine that the company is entitled to keep the cash.
In two cases decided before the Iowa Supreme Court this year, judges cited prominent scam warnings on Bitcoin Depot’s kiosks. They also pointed to a section in the firm’s terms and services, where customers must say they own the wallet receiving Bitcoin.
Athena requires customers to check similar boxes. But Schwalb argued that the language displayed on Athena’s kiosks doesn’t make a difference, especially when scammers keep victims on the phone and tell them to ignore it.
“Elderly scam victims standing terror-stricken in gas stations, pockets stuffed with uncomfortable amounts of cash, do not understand what it means to ‘generate’ a cryptocurrency wallet or have their own ‘personal Bitcoin wallet,’” it argues.
“The rapid prompts, wordy warnings, and long, complicated legal disclaimers that Athena uses at its BTMs exacerbate the confusion and pressure that scammers create for their victims,” the lawsuit continues.
U.S. Senator Dick Durbin (D-IL) called on Bitcoin ATM operators to clamp down on illicit activity against the elderly last year, among other progressive lawmakers. Some conservatives have meanwhile proposed putting them in federal buildings to encourage education.