Bitcoin ATM fraud suspect arrested

• By Liu Tzu-hsuan / Staff Writer, with CNA

A man has been arrested in Taipei on suspicion of fraud and money laundering using bitcoin ATMs, the Criminal Investigation Bureau (CIB) said.

CIB Telecommunications Investigation Corps Vice Captain Yu Wen-sheng (游文勝) said Thursday that the investigation began after a person called the 165 anti-fraud hotline to inform the agency that they had been defrauded when transferring bitcoin through a specialized ATM on Zhongxiao E Road Sec 4 in Taipei.

Investigators found the ATM had been installed by a 42-year-old man named Chuang (莊) who has a criminal record including fraud, Yu said, adding that fraud groups often use bitcoin ATMs to launder money.

Photo: AP

Chuang allegedly founded a company to import bitcoin ATMs from a foreign manufacturer and installed several of them in business areas in Taipei, the agency said.

However, he did not report his business to the Financial Supervisory Commission as required by the Money Laundering Act (洗錢防制法), the agency said.

The manufacturer told investigators that the ATMs usually come with a feature to verify the identity of people making transactions, but the feature was disabled at Chuang’s request, it said.

The agency said groups that defraud people via bitcoin ATMs usually transfer the money immediately to another wallet or change it to another cryptocurrency.

Chuang allegedly charged a 6 percent fee for transactions through his ATMs without informing users in advance, the agency said, adding that it had identified six people who this year fell victim to his scheme.

Chuang also allegedly promoted his business in chat rooms often used by fraud groups, it said.

When police arrested Chuang, police also seized five of his machines and more than NT$2.38 million (US$74.645 million) in cash, the agency said.

The Taipei District Prosecutors’ Office is investigating Chuang on suspicion of violating the Money Laundering Act, it added

In March, the central bank warned people about crypto-asset scams involving bitcoin ATMs, saying such schemes have become a major type of investment fraud in Taiwan.