Tennessee Attorney General Wins Court Ruling Allowing Crypto ATM Ban to Take Effect

Tennessee Attorney General Wins Court Ruling Allowing Crypto ATM Ban to Take Effect

Tennessee Attorney General Jonathan Skrmetti today announced that a federal court has allowed Tennessee's ban on cryptocurrency ATMs to go into effect.

The court's order rejects an effort by the cryptocurrency ATM industry to temporarily block the law. That request came as part of a larger lawsuit to invalidate Tennessee's new law.

The lawsuit, filed by GPD Holdings, LLC, doing business as CoinFlip, and Charles Wernicke, doing business as Private IT Corporation, sought a temporary restraining order to prevent enforcement of Public Chapter 766 before the law's July 1 effective date. The United States District Court denied that request, concluding that the plaintiffs failed to meet the legal standard for emergency injunctive relief.

"Cryptocurrency ATMs are tools for scammers targeting vulnerable Tennesseans and are rarely used for anything approaching a legitimate purpose," said Attorney General Jonathan Skrmetti. "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. 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."

Public Chapter 766 makes it a Class A misdemeanor to knowingly install, permit, place, or operate a virtual currency kiosk in Tennessee. The legislation was enacted following testimony before the General Assembly regarding the growing use of crypto ATMs in scams that have cost victims millions of dollars nationwide.

In its order, the Court found that while the plaintiffs demonstrated their businesses would suffer economic harm, that harm was outweighed by the public interest in enforcing a law enacted through the democratic process. The Court also concluded that the plaintiffs had not shown they were likely to succeed on the merits of their legal claims or that the alleged burdens on interstate commerce clearly outweighed Tennessee's interest in combating fraud and protecting consumers.

The Office of the Attorney General defended the law on behalf of the State and the Tennessee Department of Financial Institutions. The case will continue as the parties litigate the underlying constitutional claims, but the Court's ruling means Public Chapter 766 remains in effect during the litigation.

Anyone who believes they have been scammed may file a complaint at tn.gov/consumer.