Watchdog and West Yorkshire police raid crypto ATM operators in UK first | Hacker News Reader

Watchdog and West Yorkshire police raid crypto ATM operators in UK first

theguardian.com

42 pointsmindracer41 comments

8 or so years ago in uptown manhattan you'd see these btc ATMs in shady bodegas that I was convinced were being used for laundering money back, unless the frequenters of the surrounding methadone clinics were more astute investors than what I assumed.

Same thing in the UK. Groups of very suspect looking people feeding loads of cash into them in small grocery shops.

I think a lot of them actually stopped doing it because the ATMs themselves were becoming a huge crime target, with so much cash in them and not particularly hard to remove.

Would you mind describing what "very suspect people" look like?

I was likely one of them and I can confirm we were very shifty looking.

Mostly because we couldn't believe laundering money was this easy and surely the police will jump out at any moment (they never did)

Navy-blue Armani suit, garish yellow Bitcoin necktie, and a Thiel Foundation lapel pin. Beware of geeks bearing libertarian currencies.

Eh, I always assumed bitcoin ATMs just looked for the stores that do things like Western Union, lottery tickets, parcel drop-off etc - i.e. businesses who want a secondary revenue stream which gets people into the store.

Which is in fact the exact same thing that regular ATM operators do.

My local bodega (Brooklyn) has one, installed in the past year IIRC. I've never seen anyone using it.

I thought the future was here, and it is, but for some reason it's on sale somewhere between not at all, and a 24% markup.

Apparently lucrative, or maybe not. I'm not sure how to read that if that's reflective of their costs, wishful thinking, preying on the inattentive, or all of the above.

So, is it possible to register a crypto ATM firm or is it just another way of banning things?

How could someone apply aml/kyc without removing all the actual purpose of a crypto atm?

The haircut is so large on those machines that the only use cases at the moment are financial crimes.

You could but noone has managed it successfully. I imagine these ATMs were heavily used for money laundering/illict reasons, so probably with the KYC requirements the FCA requires the operators knew there would be no business and didn't bother applying.

Why would you pay punitive fees to an ATM operator to get bitcoin if you could just deposit the cash in your bank and buy 'normally' for many % less with a card/bank transfer?

A few years ago some of the ATM's I saw in the UK did have limits, KYC/AML, etc.

For any transaction worth a damn, you had to register an account online, provide ID, etc.

You would get a code via SMS when you used the machine to authenticate.

A few models had a built in passport scanner type thing and webcam, another had a fucking fingerprint reader.

It was pretty much the same level of KYC/AML you needed to transact at Coinbase or Kraken, but you could input or receive actual paper cash, which seems to have upset the regulator so those machines went away as well as the no-KYC ones.

> It was pretty much the same level of KYC/AML you needed to transact at Coinbase or Kraken, but you could input or receive actual paper cash, which seems to have upset the regulator so those machines went away as well as the no-KYC ones.

I assumed they went away because they combined the fat markups of bitcoin ATMs with the KYC inconvenience of Coinbase.

I don't think most of them have any kind of Chainalysis setup or that would kill the margins for most of the operators. Isn't it basically just a license scan, SMS code, and daily/monthly limits?

Why would they need Chainalysis? Is this just a UK thing? In US Kraken sells monero, which has limited to no chainalysis in theory; clearly it must not be a regulatory requirement.

No country has it as a specific regulatory requirement. In the US it is vaguely called maintaining an “adequate compliance program.” Blockchain analysis software is likely to be considered an important part of a compliance program by the government, especially when they are in the middle of a crackdown and new DoJ guidance is big on prosecuting this kind of thing (especially prosecuting individual compliance officers for AML failures). Pretty sure Kraken allowing XMR is a source of tension between them and governments too.

This all seems bizarre to me. I could go buy gold today with cash, melt it down to remove the serial numbers, and no one would have a fucking clue where it came from or where it is going. And it'd be way more reliable as a store of value and easy to exchange anonymously across borders.

You have to file export declaration when moving more than $2500 of anything out of the country (except personal stuff for vacations or whatever). You also have to declare gold when you enter if it's over a certain amount. Vague rules in the CFR (https://www.law.cornell.edu/cfr/text/31/1020.210) based off vague laws from the 70s and 80s are the basis of billions of dollars in fines collected by the government every year. This vagueness makes it possible for them to continually shift the goalposts without an act of congress, i.e. what passes for a bank compliance program in 2023 is much different than what passed in 2005 even though none of the underlying statutes have changed very much.

This is not really news - these people just didn't get licensed. There probably never will be any more licensed operators in the UK because the FCA is creating increasingly onerous requirements. In America every week there are unlicensed money transmitter prosecutions including for crypto ATMs, Paxful traders, Hawaladars (and their Chinese equivalents), etc. You have to fill out a form on the FINCEN website, get a lawyer to give you a template compliance manual, and depending on your state do the same thing there. Not really a big deal.

> There are no crypto ATMs registered with the FCA, meaning any crypto ATM operating in the UK is doing so illegally.

Who is stupid enough to operate a ATM (cryptocurrency or not) illegally? This has the be the height of stupidity.

These things have been around for years now. In the early days maybe they assumed they could be just be classed as vending machines.

Great question! I wonder if there are laws or loopholes that could make it ok, or how it compares to other forms of intermediary Exonumia/tokens[1] that can be exchanged for goods or cash? [2]

[1] https://en.wikipedia.org/wiki/Exonumia [2] https://en.wikipedia.org/wiki/Pub_token

The one Bitcoin ATM in New Zealand has turnover of +$200k/week. That's a lot of stupid money.

?! citations please

Personal relationship with the guy who owns it.

Probably people with not a lot of other options to turn crypto into some more liquid? IIRC most UK banks (including challengers) are completely hostile to anything crypto, so I'm not sure what options one would have.

Not really the case. Some have limits and bans but it is not across the board and many banks don't have restrictions. The issue is the bank is semi-responsible to refund if someone gets scammed and sends money to an exchange and they have been taking huge losses on this; so I imagine some are just blocking it instead.

To some people making 20% of $25 million for almost no work is worth it for 2 years in prison (https://www.justice.gov/usao-cdca/pr/yorba-linda-man-sentenc...). Higher risk tolerance I guess.

Surely anyone using an ATM already passed KYC as they are using a bank account?

Do LINK etc separately KYC me when I use a machine for (GBP) cash? I doubt it...

It's the other way round. People putting cash in. Which you can do at certain ATMs but they have quite low amounts as far as I know.

Besides the low amount, it is where the cash go (your account) that is identified/traceable on normal (those that accept deposits of cash and even cheques are called "evoluted" here) ATM's.

I wanted to see what these were like so I decided to burn $20 at one once and see if I could get any crypto out of it. They do the full KYC experience, so you have to scan your ID, get a text message and respond, it was wild to have to do this whole process standing in a convenience store. I definitely assumed I was having my identity stolen. But my identity was not stolen, I did the KYC steps, inserted cash, and got a paper slip with a BTC address on it with my money. The fees were insane, I don't remember but it was probably like $5 in total fees for my $20 transaction.

you are lucky to find an atm, crypto or otherwise (or a physical bank branch, come to that) in the uk these days.

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