A federal court upheld a Tennessee law that bans cryptocurrency ATMs.
In April, Tennessee became the second state in America to ban cryptocurrency ATMs, with Gov. Bill Lee signing House Bill (HB) 2505 into law.
HB 2505 creates a Class A misdemeanor offense in Tennessee for knowingly operating or installing a virtual currency kiosk.
Cryptocurrency advocates filed a lawsuit seeking to stop the law from taking effect on July 1st.
District Court Judge Traveis McDonough ruled before the law took effect that the plaintiffs did not meet “their burden of demonstrating that temporary injunctive relief is appropriate.”
McDonough noted even though the plaintiffs showed their businesses would be harmed by HB 2505, the harm did not exceed the threshold for overturning a law that was democratically adopted.
The bill “represents the legislature’s judgment that enforcement of the statute is in the public interest,” he wrote.
The judge also said the plaintiffs “have failed to meet their burden of demonstrating that their claims are likely to succeed.”
In reaction to the ruling, Attorney General Jonathan Skrmetti said these types of ATMs “are tools for scammers targeting vulnerable Tennesseans and are rarely used for anything approaching a legitimate purpose.”
“The General Assembly recognized that these machines benefit fraudsters at the expense of everyday citizens, and the Court recognized the strong public interest in allowing this law to take effect while the case proceeds,” Skrmetti said.
“If you see evidence that an elderly relative or friend is trying to make an unusual cryptocurrency transaction, work with them to make sure they’re not being ripped off,” he added.
According to a Federal Trade Commission study, reports of consumers losing money to cryptocurrency ATM scams are on the rise.
The study found in 2023 that consumers lost $114 million to Bitcoin ATMs, which is up from $12 million in 2020.
This represents an 850% increase in the number of people losing money to cryptocurrency ATM scams.
Elizabeth Bowling, Tennessee Department of Commerce & Insurance’s assistant commissioner for securities, said the state’s ban on “crypto kiosks takes away a platform that was highjacked by scammers and sends a strong message to fraudsters that they are not welcome in Tennessee.”
“I remind Tennesseans to remain vigilant and learn the red flags of crypto-scammers in order to avoid a potentially disastrous financial scam,” she said. “They should always remember to contact our team if they have a question or if they are approached about an investment.”
– – –
Zachery Schmidt is the digital editor of The Star News Network. Email tips to Zachery at [email protected].
Photo “Coinflip ATM” by Wrosenb2. CC BY-SA 4.0.
