Bitcoin ATMs emerge as a crypto currency threat

Unlike cash ATMs, though, the high value of crypto makes them prime targets for hackers

Bitcoin ATMs are a rapidly growing presence in the US and, some experts say, a rapidly growing cybercrime menace. ATMs dealing in bitcoin are similar to their cash counterparts. 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 may not draw much attention, a bitcoin ATM gets more scrutiny from bad actors.

It is clear that these machines are particularly vulnerable to both physical and cyber threats, making them a prime target for hackers and thieves, according to Timothy Bates, clinical professor of cybersecurity at 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 added.

Whether it’s hackers or scammers, the government is sounding the alarm about bitcoin ATMs. The Federal Trade Commission (FTC) reported this week that scam incidents have increased by 1,000% since 2020.

Ironically, a bitcoin ATM’s risks are directly related to its strengths, said Joe Dobson, principal analyst at Mandiant, a Google Cloud-owned cybersecurity firm.

Bitcoin is decentralized, permission-less, and immutable. A transaction cannot be reversed or recalled if funds are deposited to the wrong address, he added. 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.

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 instance, 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, he added. If an attacker compromises a bitcoin ATM, they may change the receiving wallet address (or ‘account number’), effectively stealing user funds.