Athena Bitcoin Class Action Lawsuit Says Fraud Safeguards Failed to Protect Scam Victims

Lawsuit claims Athena Bitcoin knew its kiosks were frequently used in scams targeting older consumers but abandoned safeguards that could have prevented fraudulent transactions.

A Texas man has filed a class action lawsuit alleging Athena Bitcoin failed to implement adequate fraud protections at its cryptocurrency ATMs, allowing scammers impersonating law enforcement officers to steal more than $26,000 from him.

The complaint (PDF) was brought by Douglas Arnold Schuler in the U.S. District Court for the Southern District of Texas on August 20, naming Athena Bitcoin Inc. as the sole defendant. Schuler seeks to pursue damages for all Texas residents over age 60 who were victims of financial scams involving Athena Bitcoin ATMs.

Schuler claims Athena has known since at least 2017 that its Bitcoin kiosks are routinely exploited in impersonation scams, particularly those targeting older consumers, but abandoned proactive safeguards in favor of passive warnings and checkbox disclosures that do little to stop fraudulent transactions.

Bitcoin ATM Risks

Athena operates about 3,000 Bitcoin ATMs throughout the U.S. and Latin America, including roughly 800 in Texas. The machines allow users to deposit cash that is immediately converted into cryptocurrency and transferred to a designated digital wallet.

Once cryptocurrency is transferred, the transaction is generally irreversible, without traditional chargebacks or other mechanisms for recovering the money, which Schuler maintains makes Bitcoin ATMs particularly attractive to scammers.

According to Schuler, Athena publicly discussed elderly fraud, IRS payment scams and government impersonation schemes as early as 2017, and previously used safeguards that included freezing first-time transactions, contacting customers and reversing suspicious transfers. The company also reportedly disclosed a $9,500 daily limit in 2019, with heightened scrutiny for transactions exceeding $3,000.

Athena’s own statements also allegedly indicate the company receives numerous fraud reports each month. In addition, FTC findings show that consumers age 60 and older are more than three times as likely as younger adults to report losses involving Bitcoin ATMs.

Schuler also points out that several U.S. senators called on Athena in September 2024 to address reports that its ATMs were contributing to widespread fraud against older Americans. The lawmakers allegedly questioned the company about transaction limits, fraud holds, identity verification and remediation for victims.

Bitcoin ATM Fraud Allegations

On February 19, Schuler, a 62-year-old Houston resident, allegedly received a call from a man claiming to be a Harris County Sheriff’s deputy, who told him an arrest warrant had been issued against him. Schuler subsequently received a text containing what appeared to be an arrest warrant, and the scammers demanded $20,000 in “bond” to prevent his immediate arrest.

The lawsuit indicates the scammers then directed Schuler to withdraw $20,000 from his bank and take the cash to an Athena Bitcoin kiosk inside a Chevron gas station on Richmond Avenue in Houston. Using codes provided by the scammers, Schuler deposited the money, which was converted to cryptocurrency and sent to a wallet he did not control.

While keeping Schuler on the phone, the scammers allegedly demanded another $6,600 for a separate state charge. He returned to his bank, withdrew the additional money and deposited it through the same Athena kiosk, with the cryptocurrency sent to a different wallet address. In total, Schuler allegedly lost $26,600.

After realizing he had been scammed, Schuler filed a police report and contacted Athena the following day seeking a refund. However, the company allegedly told him cryptocurrency transactions were final and irreversible and cited its Terms and Conditions and “Pledge of Ownership” screens in refusing reimbursement.

Schuler maintains the transactions presented numerous warning signs that should have triggered Athena’s fraud protections. He was a first-time user and 62 years old, deposited $26,600 through two transactions within a short period and sent the cryptocurrency to two different wallets. In addition, his initial $20,000 transaction alone allegedly exceeded Athena’s previously disclosed $9,500 daily limit.

The lawsuit claims Athena’s former practice of freezing first-time transactions and contacting customers could have prevented both transfers, while monitoring multiple destination wallets could have stopped at least the second transaction.

Schuler alleges Athena now relies primarily on generic scam warnings and checkbox attestations requiring users to indicate they are not being directed by someone else. He argues those measures are ineffective because scammers commonly remain on the phone with victims, tell them to disregard warnings and instruct them how to answer prompts.

The filing identifies several safeguards Schuler claims Athena could employ, including cooling-off periods for first-time or high-value transactions, live verification, destination-wallet screening and real-time intervention when transactions show signs of fraud.

“Schuler’s experience is not unique. Athena’s kiosks across Texas have been, and continue to be, used as instrumentalities of fraud targeting older adults.”

— Douglas Arnold Schuler v. Athena Bitcoin Inc.

Schuler estimates the proposed class includes more than 100 Texas residents over age 60 who were victims of scams involving Athena ATMs, claiming they were subjected to the same companywide fraud-prevention policies.

The lawsuit raises allegations of negligence, design defect, civil theft, conversion, unjust enrichment, violations of Texas consumer protection laws, civil conspiracy and negligence per se. It seeks compensatory and potentially treble or punitive damages, restitution of fees Athena allegedly collected from scam-related transactions and an injunction requiring stronger fraud safeguards at Athena Bitcoin kiosks throughout Texas.

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