Hong Kong’s securities regulator announced Thursday plans to regulate cryptocurrency exchanges to protect investors. Here, a woman uses her phone as she walks past an ATM machine for digital currency Bitcoin in Hong Kong, Dec. 18, 2017. ANTHONY WALLACE/AFP/Getty Images


  • The FBI underlined that crypto scams involving the elderly reached $123 million in 2021
  • Some elderly victims may be suffering from cognitive decline, making them vulnerable to such fraudulent activities
  • The majority of the elderly lack an understanding of cryptocurrency, which is taken advantage of by scammers

Over the past months, regulators and law enforcement agencies have increased their efforts in cracking down on cryptocurrency scams across the United States, given the chronicity of cryptocurrency-related scams involving the elderly and Bitcoin ATMs.

Cryptocurrency kiosks, more popularly known as Bitcoin ATMs, allow anyone to buy Bitcoin and other crypto assets using cash or debit card. Some Bitcoin ATMs feature bidirectional functionality, allowing users to purchase and sell Bitcoin and other cryptocurrencies for cash.

As of January 2023, there were over 69,000 Bitcoin ATMs scattered across the country, which is good news since these kiosks help promote financial inclusion in areas where access to banking is limited. Moreover, these kiosks allow people heavily reliant on cash to gain access to the digital financial industry and the services it offers.

But, malicious actors and scammers have taken advantage of the availability of these crypto kiosks and converted them into a tool for carrying out their fraudulent activities, which now target the elderly, including those without a crypto account or investment.

Larry Nielsen, an active law enforcement detective in Florida with years of experience investigating financial crimes, spoke to International Business Times on the rising numbers of elderly falling prey to this scam and detailed how these malicious actors orchestrate such fraudulent tactics.

According to Nielsen, this kind of crime involving Bitcoin ATMs and the elderly is what law enforcement is seeing more frequently.

"I have worked many cases involving the elderly being scammed into sending Bitcoin via a Bitcoin ATM," Nielsen, who also made recoveries of scammed cryptocurrency for the elderly victims said, adding that while he doesn't "know the exact number," "those cases keep coming in and the word needs to get out to protect the elderly."

Nielsen hosts the Crypto Fraudcast podcast, is a Certified Fraud Examiner (CFE), a Cryptocurrency Tracing Certified Examiner (CTCE) and who is Chainalysis Reactor Certified (CRC). He also owns a business called Fintech Focus Training and Consulting in which he creates and provides investigative training to law enforcement and knows how to use open-source options to trace transactions for victims who contact him outside of his role as a detective and make connections between them and "crypto-capable law enforcement"

As to how these malicious actors execute their scams, Nielsen shared an incident where scammers shocked, frightened, and deceived an elderly woman and swindled her savings.

The victim, according to Nielsen, received a pop-up accompanied by a "very loud noise" that scared her. The pop-up instructed her to call the provided "800 number" to speak to an Apple representative because her mobile phone had a virus and only the given number could resolve it.

The elderly woman was obviously not calling Apple customer support but the scammers. Nielsen said malicious actors like to "shock and awe" and "put the victims directly into a state of being scared and unsure" to make them compliant.

Being elderly, imagine how that is amplified. Then they give a command like "'Call 1-800-whatever to get rid of the virus on your computer,'" Nielsen said.

"The elderly person, obviously shaken by this, does what the pop-up says to do. They call the number. The scammer answers the phone and pretends to be a representative from Apple (or Microsoft or whatever company they pretended to be in the pop-up message," he said.

"Once on the phone, the scammer can do a few different things. They can request access to the victim's computer to check things out themselves. If the victim grants them this access, it's like opening the door to their home and telling the thief to come on and take whatever they want," Nielsen further said, explaining that this is how scammers usually take over their victims' funds or computers and gain access to their bank accounts.

However, the law enforcement investigator said that this particular incident was different since instead of the victim's device, the malicious actor started talking about the elderly woman's bank account.

"The scammer then, in all the rush, fear, and confusion gets the victim to tell them where the victim banks. The scammer then starts talking about the victim's bank account at that specific bank to make it seem more real. The victim doesn't even realize that the scammer never knew where they banked until the victim told them. This is all part of the scammer playbook. They have scripts and those scripts work," Nielsen said.

According to Nielsen, in ordinary times, the victim would have easily caught the fraud with the sudden change in the subject, but since the fear and pressure created by the scammer took over, she didn't notice any of the tell-tale clues.

Nielsen said that the victim was stuck in an OODA Loop - an acronym for Observe, Orient, Decide, and Act - which is a concept engineered to be the base for rational thinking in chaotic or confusing situations.

"It seems like the victims in these cases, especially the elderly, get stuck between Observe and Decide," he said, adding, "They can't seem to Orient themselves. The easiest and safest thing, or it feels this way at the time, is to let the scammer guide them to a satisfactory end to the situation".

Given the victim's emotional or psychological condition at the time, the scammer would then tell the victim that she had some "embarrassing charges" in her bank account, which were the reasons why her account would be frozen, and the funds would be seized by authorities at the end of the day.

"The victim is obviously in mental and emotional distress at this point and just wants a way out," Nielsen said.

The scammer then offered a solution to the victim and advised her to withdraw $35,000 and deposit it into a Bitcoin ATM near her area to "safeguard the funds and to be able to wipe the embarrassing charges from the victim's account."

According to Nielsen, "The victim had never dealt with cryptocurrency before. They didn't realize what the scammer was saying didn't make any sense and they were still stuck in that OODA loop letting the scammer lead the way."

As the victim had never owned any crypto and had no idea how it works, the scammer stayed on the phone and walked her through the process of depositing her funds into the machine, purchasing Bitcoin and sending the funds to the scammer's wallet.

Nielsen said the scammers were aware that Bitcoin ATMs come with a warning informing people that they may be a victim of scams, but these malicious actors already knew that and advised the victim to just ignore the warning.

To make sure that the victim would not get suspicious, the scammers turned the heat up and used fear and intimidation to keep the victim under their spell. "The scammer kept reminding the victim in a stern voice using stern words about the consequences for not following through," Nielsen said.

"Only realizing after it was over that something wasn't right," Nielsen, who has over 16 years of experience in law enforcement, explained.

"After it is over is when the victim can orient themselves because the scammer is no longer present on the phone keeping them mentally occupied. I liken this to being taken hostage. The elderly victims are literally taken hostage over the phone, mentally and emotionally," he added.

"The big thing here, and I say this a lot, is that even though a victim doesn't own cryptocurrency and may not even understand it they can still become the victim of a cryptocurrency crime. That's what happened here," Nielsen said.

"In the case of Bitcoin ATM scams, once the victim realizes they were scammed, they usually report this to the police. Of course, there are plenty of people who probably do not report due to embarrassment, fear of judgment, or thinking law enforcement can't do anything," he added.

Fortunately, this victim reported the incident "not too long after it happened" and Nielsen, based on his training and experience, "was able to use a combination of advanced paid blockchain analytics software and open-source tracing methods to trace the transactions and locate some of the Bitcoin at a cooperative centralized cryptocurrency exchange in time and use the legal process to make a partial recovery of the victim's funds."

According to Nielsen, this kind of Bitcoin ATM scam targeting the elderly happens in a short period and fast, unlike investment scams, romance scams and Pig Butchering scams which span longer time frames.

"I believe education is the key to prevention in these cases. I believe as many elderly people as possible need to be made aware of this type of scam as well as their adult children. I mention their adult children because, often, an elderly person's adult children will live in a different state," Nielsen said, adding, "This seems to be especially true in South Florida. If their adult children are also aware they can have conversations with their parents about this stuff and check up on them from time to time."

The Federal Bureau of Investigation (FBI) underlined that crypto scams involving the elderly reached $123 million in 2021 and continue to grow.

Scammers target the elderly because most have substantial financial resources, are usually very trusting, and are unlikely to report being victims of these scams for fear of being restricted from their financial independence by family members.

Some elderly victims may be suffering from cognitive decline, which is a major factor that makes them vulnerable to this kind of fraudulent activity. Moreover, the majority of the elderly lack an understanding of online banking and cryptocurrency, which are taken advantage of by scammers.