News regarding fraud at Bitcoin ATM company

Yesterday, important news came out about a cyber fraud that occurred against a Bitcoin ATM company. 

However, it should be quickly pointed out that this is Coin Cloud, which is a company that went bankrupt in February of this year. 

Coin Cloud and the news about the Bitcoin ATM fraud

Coin Cloud is a Las Vegas-based company that operates more than 4,000 Bitcoin ATMs around the U.S., with between $50 million and $100 million in assets.

However, it filed for bankruptcy in February, due to liabilities of between $100 million and $500 million, and about 10,000 creditors.

Its largest creditor is Genesis Global Capital, which lent it just over $100 million last year. Genesis itself filed for bankruptcy in January.

Both companies fall under Chapter 11 of the U.S. bankruptcy process, meaning they can try to restructure and then perhaps later reopen. 

This means that although Coin Cloud has filed for bankruptcy, the company’s operations can continue, as this tweet from June shows: 

The attack

The attack was disclosed by vx-underground, according to which hackers claimed to have compromised Coin Cloud.

The hackers were allegedly able to take 70,000 customer selfies, taken by ATM cameras, and 300,000 PII including social security number, date of birth, first name, last name, e-mail address, phone number, current occupation, physical address and more from Coin Cloud’s systems. 

They claim such PII belongs to people residing in the United States and Brazil.

They also allegedly stole the source code of the company’s entire management backend.

This is therefore a very serious breach of Coin Cloud’s corporate platform, although no funds appear to have been stolen. 

So far, the company has not yet issued any statement or explanation on the matter. 

Bitcoin ATMs and the cyber fraud news

Bitcoin ATMs are automated machines that allow live individuals to buy and sell BTC. 

They are often placed in transit locations, where there might be a need, for example, to change Bitcoin into cash on the fly, and are connected to crypto exchanges or brokers that allow buying and selling in fiat currency. 

Their main use is precisely to allow the exchange of Bitcoin for bills, and they often offer other cryptos in addition to BTC. 

The problem is that the operators of these machines struggle a bit to simultaneously meet customers’ demand for anonymity with the transparency required by the authorities. Moreover, if during bull-runs they attract many people who want to convert crypto to cash, during bear-markets their use drops considerably. In fact, nowadays not many people want to buy crypto by paying in banknotes. 

That is why during 2022 not only Coin Cloud had problems in this respect. On the contrary, even in the United Kingdom crypto ATMs were in fact banned, and by now there are virtually none. 

Crypto ATMs around the world

At Coinatmradar.com there is a map of crypto ATMs around the world. 

You can clearly see that while there are thousands in the US, in Europe for example there are not many. 

Suffice it to say that after the U.S., the other two countries in the world with the most crypto ATMs are Canada and Australia, while among European countries Spain and Poland stand out. 

Regulators dislike them little because they allow banknotes whose provenance is actually unknown and untraceable to be exchanged into cryptocurrency, so that cryptocurrencies can be sent around the world freely. 

It is no coincidence that in tiny Switzerland it turns out that there are nearly 140, while in Italy there are less than 100, in Russia less than 80, and in France only 17. 

Despite the fact that they have relatively high commission costs, which in theory should make a good profit for the operators, there are so many problems that it is not surprising that during the bear-market many crypto ATM operators had problems surviving economically and financially.