Bitcoin Depot Bankruptcy Signals Decline of Crypto ATM Wild West

Bitcoin Depot Inc.'s recent bankruptcy is part of a larger downturn in the crypto ATM operator industry spurred by a regulatory crackdown over concerns of widespread fraud.

The niche corner of the crypto world has seen systemic decline in North America, with former leader Bitcoin Depot’s 9,700 kiosks going dark last month after management found it couldn’t implement anti-fraud measures while maintaining a viable business.

With state-level restrictions capping transaction fees and imposing daily limits, criticism from the Federal Trade Commission, and outright bans considered in US localities and Canada, the sector has contracted even as crypto overall has been adopted more broadly.

Bitcoin Depot’s proposed bankruptcy sale may be a bellwether of future interest in an industry at a crossroads.

“Crypto ATMs already resemble other fringe financial products where profitability depended heavily on consumer confusion, financial desperation, or fraud exposure rather than broad-based financial utility,” said Brookings fellow Tonantzin Carmona.

Upcoming Sale

Bitcoin Depot, which filed Chapter 11 in May, aims to sell thousands of Bitcoin ATMs, its network software and operating system BitAccess, remaining cryptocurrency, and other property. Its most valuable assets could be its newly acquired businesses—social betting platform Kutt Inc. and ReadyBucks, a merchant cash advance business aimed at independent contractors.

Houston Bankruptcy Judge Christopher Lopez at a Tuesday hearing authorized Bitcoin Depot to start marketing its assets after its attorneys allayed concerns from several states that have sued or investigated the business by confirming that it won’t sell state-regulated licenses or customer information.

The sale would be the largest liquidation of such kiosks in bankruptcy since Cash Cloud Inc., which did business as Coin Cloud, once a major crypto ATM operator. It collapsed into Chapter 11 in 2023.

Coin Cloud sold its assets in June 2023 for $5.7 million. Its 4,800 kiosks eventually became embroiled in another bankruptcy—that of the buyer’s principal, Daryl Fred Heller, who was linked to an alleged Ponzi-like scheme.

Boom to Bust

Crypto ATMs emerged in 2014, offering consumers access to the digital finance system. The industry peaked at 34,000 machines in the US in 2022. Bitcoin Depot went public after a de-SPAC deal in 2023.

By 2024, mounting consumer fraud drew public scrutiny.

Impersonators claiming to be government agencies, police, or tech companies urged victims to deposit cash into crypto ATMS to resolve fake emergencies. A 2024 FTC report found over $110 million lost to such schemes in 2023, a tenfold increase since 2020.

At least a dozen people filed claims totaling tens of thousands of dollars against Bitcoin Depot. One of them, Brittany Lee-Foster, received a call in April from a restricted number claiming to be a sheriff’s office deputy, telling her she had an active warrant for her arrest for failing to appear for jury duty.

The 39-year-old Rogers, Ark. resident said the man on the line coached her to withdraw $1,000 from her bank account and deposit it into a Bitcoin Depot ATM at a convenience store.

She was told to drive to the local jail and wait in the parking lot for the warrant to clear. When it went through, the “deputy” hung up. Then she put the pieces together.

“All I could do was sit there in the jail parking lot and cry,” she said.

Regulators have started to take notice.

California passed its Digital Financial Assets Law in 2024, capping fees at 15% and limiting daily transactions to $1,000.

Maine in 2025 enacted a 3% fee cap, a $1,000 daily limit, and a requirement for ATM operators to issue refunds for fraudulent transactions within 90 days.

Iowa in February sued Bitcoin Depot and another ATM operator, CoinFlip, seeking penalties for violations of the state’s consumer fraud act related to facilitating crypto scams and misleading safety representations. St. Paul, Minn., Spokane, Wash., and Waltham and Gloucester, Mass. banned crypto kiosks outright.

Bitcoin Depot said in October it would require identification for all transactions. For the first quarter of 2026, Bitcoin Depot’s revenue decreased by $81 million, or 49%, compared to the same period in 2025.

Carmona said regulations emerged in response to a sharp rise in scams, fraud, and consumer complaints, particularly among elderly consumers. FBI data for 2025 shows nearly 13,500 complaints and $389 million in losses tied to crypto ATM use, a 58% increase over 2024. More than half of the complaints involved people over 50.

In September 2024, the FTC called Bitcoin ATMs “a payment portal for scammers.” The irreversible and direct nature of crypto transactions and the less stringent identity requirements also played a part.

“The more important question is whether crypto ATMs were ever a particularly sustainable or socially useful financial product to begin with,” Carmona said. “These machines often charge extremely high fees while exposing users to substantial fraud risk. And unlike traditional ATMs, they were not solving a major unmet need in the financial system.”

Industry Headwinds

Bitcoin Depot competitor Athena Bitcoin Global took about 12% of its kiosks offline in the first quarter, citing low profits and regulations in several states.

The company last month moved to deregister its stock after a 49% revenue decline in the first quarter of 2026 compared to the same period last year, from $73 million to $37 million. It also cited fee and transaction regulations.

ATM giant NCR Atleos’ crypto platform LibertyX saw revenue fall $26 million in 2024 due to transaction regulations. Atleos CEO Tim Oliver in a May 2025 investor call said there were no plans for further investment.

“It’s a distraction, and I wish it wasn’t there,” he said of LibertyX.

Brett A. Axelrod, a Fox Rothschild LLP partner who represented Cash Cloud in its bankruptcy, said the industry faces slower growth, with companies needing fewer machines in more strategic places. But she doesn’t see the industry vanishing.

“We’re not going to have dinosaurs-level, we’ll probably still have some crocodiles,” Axelrod said.