Peabody to ban Bitcoin ATMs after residents scammed

 

Peabody to ban Bitcoin ATMs after residents scammed

·         By Caroline Enos | Staff Writer

 

·         Oct 25, 2025

   

PEABODY — An ordinance before the City Council would ban Bitcoin machines in the city after Peabody residents have lost well over $100,000 in scams involving these machines.

Councilors voted unanimously Thursday night to draft and advertise the ordinance change banning all machines that sell virtual currency including but not limited to Bitcoin.

They are expected to adopt the ordinance in a later final vote.

Peabody would become the third city in the state to implement this ban. Gloucester and Waltham both approved similar bans last month through ordinances Peabody used to model its own.

“What we’ve seen is the most vulnerable folks in our society have been targeted, particularly the elderly people who are very vulnerable to being afraid and wanting to make sure they’re following rules,” Essex County District Attorney Paul Tucker said at the council’s Legal Affairs subcommittee meeting Thursday night.

Scammers often pose as federal agents with the FBI or Homeland Security. Sometimes they create fake romances with victims over weeks or months, or install viruses on their computers that lead to a victim speaking with a scammer pretending to be a tech support agent.

In an incident recently investigated by the Essex County DA’s office, a scammer convinced a victim that they would be ensnared in a pedophilia ring if they didn’t send money through Bitcoin machines, Tucker said.

The perpetrators convince victims to go to their banks and withdraw large sums of cash, often staying on the phone to coach them on what to say when bank tellers question why they are taking out so much money.

Victims then go to deposit the cash into these virtual currency machines, which resemble coin machines and ATMs. They deposit their money into them to typically buy Bitcoin, a virtual currency that has gained popularity over the last decade, and send it to the scammers.

But most of the time these machines are being used, it’s by victims who have been convinced to send Bitcoin to scammers, Peabody Police Detective David Bettencourt told the City Council on Thursday.

“Usually, the only money in these machines are the victims’ funds,” Bettencourt said. “If any of us are gonna buy Bitcoin, we’re gonna call a bank and buy Bitcoin. We’re not gonna walk into 7-Eleven and put money into a machine.”

Once that money is in the machine, victims almost never get that money back — even after the police are involved, he said.

More than $11 million has been reported stolen in Essex County through these scams this year alone. That’s probably only a third of what has actually been stolen since January, Tucker said.

One Essex County couple who are in their mid-80s recently lost more than $100,000 — the remainder of their life savings — through a scam involving a Bitcoin machine, Tucker said. A woman in Peabody lost $42,000 over several weeks in July.

A Salem woman who has a law degree and worked for the state for 30 years also fell victim to the scam. She used a Bitcoin machine on Canal Street to send scammers $13,000, then bought $1,000 worth of gift cards at Target at the their request so they could redeem their value, another common scam.

“When somebody tells you that they can’t believe that they’ve been scammed, believe them, because everybody we talked to said, ‘I can’t believe that this happened to me,’” Tucker said.

Legislators on Beacon Hill are working on bills to ban these machines or at least limit how much users can deposit in a single day. But due to pushback from the Bitcoin industry, it will be a while before laws like this go on the books, Tucker said.

Bitcoin machine companies, particularly Bitcoin Depot, largely have not cooperated with Peabody detectives who investigate these scams. One went so far as to threaten to report a Peabody detective to the POST Commission for taking a machine out of service after it was used in a scam, Bettencourt said.

These companies argue that because they aren’t the scammers, they shouldn’t lose out on the money deposited into their machines, he said.

There are 16 Bitcoin machines currently in the city. Users are often charged between 30% and 50% in fees, compared to cryptocurrency apps that typically keep these fees between 1% and 3%.

A study conducted by the Iowa Attorney General’s office found between 94% and 98% of all deposits made on these machines in that state were sent to scammers coercing victims.

Because they are used in scams so frequently, Bitcoin machine companies have at times included language in contracts preventing the businesses who house the machines from speaking with police in scam investigations.

“To my mind, that shows actual knowledge that these are being used for fraud, if they’re actually encouraging store owners not to interfere,” said Scott Dullea, chief legal counsel for the Essex County DA’s office.

Businesses housing these machines are financially incentivized to not report these scams because that could stop payments to them, Dullea said.

City councilors shared support for banning the machines during Thursday’s discussion.

“This is disgusting, and this is all educational to me, and I’m in law enforcement,” Councilor at-Large Anne Manning-Martin said. “We certainly need to get this out to everybody.”

Nothing will stop scammers from sending victims to machines in neighboring communities where they remain legal, Ward 2 Councilor Pete McGinn said.

That’s why the DA’s office is working with other Essex County communities, including Salem and Beverly, to adopt ordinances like what’s being considered in Peabody, Dullea said.

“This calls out for a bigger solution, a statewide solution, and that’s currently being undertaken. Obviously, that takes a lot of time,” Dullea said. “We’ve decided that this is probably the best stop gap to take right now to protect local residents.”

Contact Caroline Enos at CEnos@northofboston.com .