Bitcoin of America, a prominent provider of virtual currency services, has agreed to halt its operations of crypto ATMs in Connecticut following a settlement reached with the Department of Banking. The consent order, approved by both parties, comes after Bitcoin of America was found to be operating virtual currency kiosks in the state without the necessary license.
Bitcoin of America to vacate Connecticut market
Since these kiosks transferred funds to third parties, Bitcoin of America was legally required to obtain a money transmitter license for the transference of the Bitcoin (BTC) funds. As a consequence of these unlicensed operations, four unsuspecting consumers fell victim to scams, resulting in significant financial losses amounting to tens of thousands of dollars.
The scammers, posing as legitimate entities such as banks, electrical suppliers, and internet service providers, manipulated unsuspecting consumers into depositing cash into virtual currency kiosks using QR codes provided by the fraudsters.
Unknown to the victims, their money was converted into virtual currency and transmitted directly to the scammers’ virtual wallets, resulting in the loss of their funds.
Meanwhile, in a commendable move, Bitcoin of America has agreed to compensate the affected consumers, making restitution payments totaling $86,000.
The Connecticut Department of Banking, through its Banking Commissioner Jorge Perez, has emphasized the need for caution when engaging with virtual currency kiosks. Commissioner Perez expressed concern over scammers exploiting consumers’ vulnerabilities by luring them into depositing cash into kiosks distributed throughout the state.
However, the Department of Banking intends to take decisive action to ensure that kiosk owners and operators adhere to the law and obtain the necessary licenses.
In response to this growing problem, the Connecticut Department of Banking and the Connecticut State Police jointly proposed “An Act Concerning Digital Assets” during the current legislative session that explicitly requires virtual currency kiosks to obtain money transmitter licenses, ensuring that the Commissioner has jurisdiction over both the machines and their operators.
The bill seeks to enhance consumer protection by mandating clear on-screen disclosures that users must acknowledge and introducing additional safeguards for first-time virtual currency kiosk users.
52 Bitcoin ATMs seized
In a related update, reports have surfaced regarding the confiscation of over 50 Bitcoin ATMs in Lorain and Cuyahoga counties in early March. A vast operation involving 28 law enforcement agencies executed 54 search warrants across the aforementioned counties.
As a result, 52 Bitcoin machines associated with Bitcoin of America were seized—41 in Cuyahoga County and 11 in Lorain County.
