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Points of Focus
- A Houston man sued Athena Bitcoin over a $26,600 kiosk scam.
- The lawsuit follows the pattern that led to Bitcoin Depot’s bankruptcy in May.
- Texas lost $56.8 million to kiosk scams last year with no oversight.
A Houston man filed a class action against Athena Bitcoin on Aug. 20, alleging the company knew for years its cryptocurrency kiosks were routinely used to scam older adults but abandoned safeguards that could have stopped it. The lawsuit, filed in the US District Court for the Southern District of Texas, follows the exact liability pattern that pushed Bitcoin Depot, the nation’s largest kiosk operator, into bankruptcy in May.
Douglas Arnold Schuler, 62, seeks to represent all Texas residents over 60 who were scammed through Athena Bitcoin kiosks. This class could be substantial given how concentrated crypto kiosk fraud has become in the state.
How the Athena Bitcoin scam allegedly unfolded
According to the complaint, Schuler received a call on Feb. 19 from someone claiming to be a Harris County Sheriff’s deputy, who said an arrest warrant had been issued against him and demanded $20,000 in ‘bond’ to prevent immediate arrest.
The lawsuit says Schuler withdrew the cash and deposited it at an Athena Bitcoin kiosk inside a Chevron station on Richmond Avenue in Houston, converting it to cryptocurrency and sending it to a wallet he did not control.
The scammers then demanded another $6,600 for a separate charge while keeping Schuler on the phone, and he deposited that amount through the same kiosk to a different wallet address, bringing his total loss to $26,600. The complaint claims Athena has known since at least 2017 that its machines were frequently used in scams targeting older consumers.
Why Bitcoin Depot’s bankruptcy makes this lawsuit different
Athena is not the first kiosk operator to face this argument; it is the latest.
Bitcoin Depot filed for Chapter 11 bankruptcy in May, citing ‘increasing litigation and regulatory enforcement,’ and shut down its network of roughly 9,000 kiosks across North America, including about 900 in Texas.
An Iowa attorney general investigation found that 98% of transactions through Bitcoin Depot’s kiosks in that state were scams, prompting a lawsuit against the company and a second operator, CoinFlip. Massachusetts sued Bitcoin Depot separately in February.
That pattern, an operator facing scam-liability claims serious enough to threaten its survival, is now playing out against a second major operator, suggesting the physical kiosk model itself carries structural legal exposure rather than the problem being isolated to one company’s practices.
Texas leads the nation in kiosk scam losses with no oversight
About 1,200 Texans lost a combined $56.8 million to crypto kiosk scams last year, more than any other state and roughly double second-place Florida, according to FBI complaint data. Texas does not license or regulate crypto kiosks, a gap lawmakers are now examining ahead of the Legislature’s January session.
Local officials have filled that vacuum with direct action: a Jasper County sheriff’s deputy cut open a Bitcoin Depot kiosk with a power tool last summer after a family lost $25,000, recovering about $32,000 in the machine.
A similar seizure in McLennan County in 2023, after an 82-year-old woman lost $15,000, ended with Bitcoin Depot suing the county and settling on terms stipulating the company was not involved in the fraud. This outcome returned the woman’s money but left the underlying safeguard question unresolved.
San Antonio took a regulatory rather than a physical approach: as of July 1, the city requires bilingual English and Spanish warning signs at its 193 kiosks, with fines of $100 to $500 per machine per day for operators that skip them. Indiana, Tennessee, and Minnesota have banned crypto kiosks statewide outright, while Texas legislators have so far only discussed options rather than adopting them.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency prices are highly volatile. Always conduct your own research before making investment decisions.
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