York Regional Police say dozens of victims have funnelled $340,000 in cash into Bitcoin ATMs in a scam sweeping the region.

Investigators say the machines are being used in the latest version of a Canada Revenue Agency (CRA) scam, in which fraudsters posing as tax collectors or police officers threaten to arrest potential victims over tax issues.

The victims are then advised to use ATMs which convert the cash into Bitcoins: the digital, decentralized cryptocurrency, which currently trades for around $9,200.

Since April, police say 45 people have been defrauded in York Region, including Linda, who did not disclose her full name during a press conference held by York Regional Police in Richmond Hill on Wednesday.

'They're very convincing'

Linda said the fraudsters called her cell phone and advised her that she was under investigation for tax fraud and that if she didn't resolve the issue immediately, she'd be arrested.

"They're very convincing and they keep at it," Linda said. "They say there's a warrant for your arrest, and York Regional Police will be giving you a call shortly."

Linda, who did not provide her full name, lost $12,000 in the CRA Bitcoin scam. (Joe Fiorino/CBC)

At first, Linda said she suspected the call was illegitimate, but she was eventually worn down by the tactics used by the fraudsters.

She told reporters they knew some of her personal information, and one of the caller's numbers showed up as "York Regional Police" on her cell phone.

Eventually, Linda was convinced to withdraw $12,000 from her bank and take it to a convenience store in Richmond Hill, where she deposited the money into a Bitcoin ATM. The machine converted the cash to Bitcoin and transferred the funds to the caller.

Linda said she'd never heard of Bitcoin before receiving the call.

"They made me believe that it was a machine used by Revenue Canada to transfer money quickly," she said at the news conference outside the store.

The whole ordeal lasted around four hours, she said, after which she began to realize what had happened.

"'Stupid,' you say, 'How could you fall for this?' I did, and I feel embarrassed about it," Linda said. "I was completely destroyed."

Tracking money impossible

Police say Bitcoin ATMs are legitimate, however, the nature of the currency means that once the conversion is made, following the money becomes practically impossible.

York Regional Police say they are unable to trace Bitcoin transactions due to the secretive nature of the currency. (Roslan Rahman/AFP/Getty Images)

"There really isn't anything at this point, it's a one way street," said York Regional Police Det. Const. Rob Vingerhoets.

"The only way to recover it would be for the person who received the Bitcoin to send them back… If they're a criminal, they're not likely to do that."

Investigators believe the calls are being made by overseas organized crime outfits, further complicating efforts to identify the scammers.

Preventing future success

With little ability to track the fraudsters or recover the money, police say public awareness is the best strategy to combat the scam.

"Our main strategy, the point of being here today was to stop people from becoming victims in the first place," Vingerhoets said.

Police have also placed flyers near the ATMs advising potential victims that CRA and other "legitimate agencies" do not accept Bitcoins as payment.

Linda too said she decided to tell her story as a service to other people who may be targeted in the scam.

"Having to tell my story is kind of painful," she said. "But I believe that if I share my story, perhaps I can prevent other people from being victims."