The US Bitcoin ATM industry is breaking under fraud, bans, and fees

A notable development has hit the crypto markets. Bitcoin ATM company, Bitcoin Depot, filed for Chapter 11 protection on May 18 in the Southern District of Texas, announcing it would wind down operations and sell assets, and that its kiosk network, with over 9,000 locations globally as of August 2025, would go offline the same day. A May 12 SEC disclosure showed that first-quarter revenue fell 49. 2% year over year, gross profit collapsed by 85.

5%, and management flagged “substantial doubt” about the company's ability to continue as a going concern. The net loss for the quarter was $9. 5 million, compared with net income of $12.

Market Dynamics

2 million a year earlier. Bitcoin Depot tied the deterioration to state and municipal restrictions, lower transaction limits, enhanced identity verification requirements, litigation, and more than $20 million in accrued legal judgments. That accounting turns the bankruptcy into a regulated business, explaining how compliance requirements dismantled its economics.

2% YoY Gross profit — — -85. 5% YoY Net income / loss $12. 5M loss Swing to loss Legal judgment accruals — $20M+ Balance-sheet pressure What the machines were supposed to do A Bitcoin ATM lets users exchange cash for cryptocurrency without linking a bank account, making Bitcoin accessible to cash-preferred customers, the underbanked, and anyone who wants in-person access without connecting to an exchange.

The model carried a structural problem from the start, as FinCEN puts kiosk fees at 7% to 20%, far above what centralized exchanges charge. That pricing could sustain urgent or one-off cash conversions, but building a mass-adoption argument on 20% fees was always going to break down. The machines functioned as expensive on-ramps, and the economics of low-cost, repeat-use by consumers were always out of reach.

Market Impact

FTC data showed that reported Bitcoin ATM fraud totaled more than $65 million in the first half of 2024, with a median reported loss of $10,000. FBI data for 2025 recorded 13,460 complaints tied to crypto kiosks, with total reported losses of $389 million, representing a 58% jump. Adults aged 60 and older accounted for roughly $257.

5 million of that figure, and that concentration among older victims gave the regulatory backlash a political durability that standard anti-money-laundering enforcement rarely achieves. Indiana enacted a statewide prohibition on virtual currency kiosks, Tennessee made installing or operating such kiosks a Class A misdemeanor, and Minnesota approved a ban set to take effect in 2026. Bitcoin Depot's bankruptcy connects those two threads directly, since stricter KYC controls cut transaction throughput, fraud warnings and lower limits reduced per-machine revenue, and litigation costs compounded the $20 million in accrued legal judgments already on its books.

The compliance measures that made kiosks safer stripped out the economic advantages that had made high fees defensible. Finbold's compilation of Coin ATM Radar data shows the worldwide Bitcoin ATM count rose from 37,722 to 39,158 in 2025, adding roughly four machines per day. The US ended 2025 with 30,617 machines, about 78% of the global installed base, but grew only 1.

Crypto markets are watching this development closely as investors weigh its potential impact on prices.