Texas Leads Nation in Crypto Kiosk Fraud as Lawmakers Consider Stricter Bans

A Staggering Loss for Texans

Texas residents fell victim to cryptocurrency kiosk fraud at an alarming rate in 2025, losing $56.8 million—more than any other state—according to FBI data presented to a legislative committee Thursday. The state accounted for 1,179 of the 13,460 complaints logged nationally, with reported losses nationwide rising 58% to $389 million across the year. These machines, which convert cash into cryptocurrency and are commonly found in gas stations and convenience stores, have become a significant vector for financial crime. The Texas Tribune estimates approximately 4,000 such kiosks operate throughout the state.

The Mechanics of Deception

The scams operate through a disturbingly simple formula: fraudsters persuade victims to withdraw money from their bank accounts and feed it directly into cryptocurrency kiosks. Once the funds enter the system, recovery becomes nearly impossible, according to Jesse Saucillo, deputy commissioner at the Texas Department of Banking. The money typically flows to unhosted wallets, then passes through mixers—tools designed to obscure transaction trails—making it extraordinarily difficult to retrieve stolen funds. Adding another layer of sophistication to the scheme, scammers now employ AI-generated impersonations of police and state agencies in approach calls, making victims more likely to comply with their demands.

The scale of this criminal activity has drawn international attention. Kelley Currie, a fellow at the Atlantic Council, told lawmakers that Interpol now treats cryptocurrency scamming as an industry comparable to drug trafficking and human trafficking. Currie specifically highlighted that many kiosks are “run by Chinese money launderers,” though the Justice Department has charged Chinese nationals in connection with cryptocurrency fraud operations in Southeast Asia without formally confirming those groups typically operate kiosks in the United States.

Legislative Momentum Toward Action

Texas lawmakers are increasingly prepared to take aggressive action. Rep. AJ Louderback remarked to the committee: “In my career, I’ve never seen a more efficient, cleaner way to steal money.” This sentiment has galvanized legislative momentum, with committee chair Rep. Cole Hefner hinting at forthcoming legislation that would go beyond mere regulation. “I got a pretty good idea coming down,” he told colleagues. “And it’s kind of simple, but kind of abrupt.”

Texas would not be the first state to move toward an outright ban. Indiana became the first state to prohibit Bitcoin ATMs entirely in March, following passage of legislation that allows the attorney general to sue both machine operators and the retail locations hosting them. At the time of the ban, nearly 900 kiosks were operating in the state. Tennessee and Minnesota have since followed Indiana’s lead with similar prohibitions. Other states have implemented more measured regulatory approaches: South Dakota caps daily transactions at $1,000 and monthly transactions at $10,000, while requiring full refunds for fraud victims. Wisconsin and Virginia have adopted comparable limits. Additionally, Maine’s regulator secured a $1.9 million settlement from Bitcoin Depot to compensate defrauded victims. Approximately 30 states have enacted some form of legislation addressing crypto kiosks since 2023, according to AARP.

Robust regulatory frameworks that eliminate kiosk fraud demonstrate how mainstream markets demand consumer protections—positioning legitimate blockchain infrastructure as the trustworthy alternative to the criminal enterprises giving crypto a bad name.

Source: FBI, via Decrypt. Not financial advice.