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Grosse Pointe Farms Takes Precautionary Measures Against Crypto ATM Scams
The quaint town of Grosse Pointe Farms, located just outside the bustling city of Detroit, has proactively passed a local ordinance to regulate the use of cryptocurrency ATMs. Interestingly, this decision was made despite the town currently having no such machines. The unanimous vote by the city council followed reports of a scam in nearby St. Clair Shores, where a local resident was targeted through a crypto ATM.
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Addressing Potential Scam Threats with New Regulations
During a recent city council meeting, the ease with which scammers exploit individuals, especially seniors, through crypto ATMs was a significant concern. Council member Lev Wood highlighted that these machines often operate in a manner lacking transparency, making users vulnerable. To combat this, new regulations mandate that any crypto kiosk within the town must be registered with the Department of Public Safety. Additionally, operators are required to secure a business license and prominently display warnings on their machines regarding the potential risks of fraud and the irreversible nature of transactions.
A key aspect of this ordinance is the imposition of spending limits for new users. The law enforces a $1,000 daily transaction limit and a $5,000 cap over the initial 14 days of usage. According to city attorney Bill Burgess, this measure is designed to offer new users an opportunity to familiarize themselves with the machines before engaging in larger transactions. This proactive stance mirrors actions taken in other states like Arizona, Nebraska, California, and Washington, where similar restrictions or outright bans on certain crypto ATM operations have been introduced.
Insights from Coinflip: A Firsthand Account of Scam Prevention
Carson Gat, representing Coinflip—a prominent digital currency ATM operator based in Chicago—attended the council meeting to share insights. Gat recounted an incident where he intervened to prevent an elderly woman from falling victim to a scam at one of their machines. Coinflip, which has been operating in Michigan since 2019 and holds a money transmitter license, is considering implementing similar user limits to curb fraud, as scams typically occur during a customer’s initial transaction.
While Coinflip did not object to the town’s new rules, Gat emphasized the critical balance between ensuring user access and maintaining safety. His testimony reinforced the council’s awareness that such scams are not theoretical but are actively occurring.
State and National Efforts to Combat Crypto ATM Scams
The initiative by Grosse Pointe Farms aligns with broader efforts at the state and national levels. Earlier this year, Michigan Attorney General Dana Nessel issued a statewide alert warning residents about the risks associated with crypto ATM scams. Her office advises individuals to avoid these machines if prompted to deposit money under duress.
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