The Department of Banking reported that Bitcoin of America still needs to secure a money transmitter license to operate ATM kiosks within its boundaries.
Bitcoin of America agreed with the Connecticut Department of Banking to cease operations due to a lack of license.
Bitcoin of America
Bitcoin of America was a virtual currency exchange registered with the United States Department of Treasury and operates directly with all digital currency users without intermediaries through an accessible digital platform that allows the buying and selling of digital currencies with ease.
Now, it has stopped its operations, and its official website also has this notice:
Department of Banking announced that Bitcoin of America failed to secure the appropriate license to operate Bitcoin ATM kiosks within Connecticut. As a result, a consent order was implemented after four Connecticut consumers lost tens of thousands in an apparent scam involving one or more kiosks belonging to Bitcoin of America. As per state officials, four Connecticut consumers experienced losses totalling tens of thousands due to these kiosks in question.
"Under a consent order, Bitcoin of America made restitution payments totalling $86,000 to consumers affected. Based upon an indictment for criminal conduct, they will now cease operations here in Connecticut."
Banking commissioner Jorge Perez issued a warning against unlicensed cryptocurrency kiosks. According to him, investors are often coaxed into depositing cash into these kiosks in exchange for an equal amount of cryptocurrencies back from scammers.
Bitcoin of America — which allows customers to transfer funds between accounts to third parties — must obtain a money transmitter license in Connecticut. Legislation has already been filed to enforce additional consumer safeguards and ensure licensing for digital currency kiosks as money transmitters in this state.
Additionally, the Connecticut State Police, Department of Banking, Attorney General’s Office and Consumer Protection issued an alert against unlicensed crypto and Bitcoin ATMs.
Ohio authorities confiscated 52 Bitcoin of America ATMs and kiosks suspected of being used in scams.
Geopolitical instability worldwide and crackdowns on unlicensed operations have hurt the global network of Bitcoin ATMs. 3,627 crypto ATMs went offline – marking one of the most significant monthly declines ever seen among crypto ATMs.
Connecticut Banking Commissioner Announces Settlement Agreement With Bitcoin of America To Recover $86,000 For Connecticut Consumers
Banking Commissioner Jorge Perez announced that the Connecticut Department of Banking and Bitcoin of America had reached an amicable settlement through a consent order agreed upon by both parties. Bitcoin of America had been operating virtual currency kiosks without first securing a valid license; these allow consumers to purchase virtual currency with cash; four Connecticut consumers who patronized these kiosks were victims of scams which caused them to lose over $100,000 each, following criminal indictments of Bitcoin of America, they agreed to make restitution totalling $86,000 to these individuals before winding down operations here in Connecticut.
“This case underlines the need to use virtual currency kiosks with caution,” stated Commissioner Jorge Perez. “Scammers are taking advantage of consumers’ vulnerabilities to scam them into depositing cash into these kiosks that can be found throughout California. Our Department is taking steps to ensure that owners and operators of such kiosks adhere to state law.”
In this instance, the Department of Banking learned of four Connecticut consumers who lost money through kiosks operated by Bitcoin of America and scammers. Because their funds were transferred directly into third-party accounts without authorization or licensing from Bitcoin of America as a money transmitter, these consumers were prey to fraudsters who fooled them into believing they were from legitimate companies such as banks, electrical suppliers and internet service providers. Scammers directed consumers to deposit cash into virtual currency kiosks provided by them with QR codes to safeguard their funds. Unfortunately, consumers unwittingly used their deposit to purchase virtual currency, which was then transmitted directly into the scammer’s virtual wallet and caused them to lose all funds deposited with that kiosk.
To combat this mounting concern, the Connecticut State Police and Department of Banking have presented this legislative session HB 6752, An Act Concerning Digital Assets. This bill would grant the Banking Commissioner authority to regulate virtual currency and other digital assets, license virtual currency kiosks as money transmitters within state borders, provide consumer disclosures that require affirmative agreement before using such machines, as well as provide extra safeguards against future misuse by first-time virtual currency kiosk users.
Commissioner Perez would like to express his sincerest thanks and appreciation to the Connecticut State Police for helping to bring about an early resolution in this matter.
To better assist consumers, the Department of Banking, in partnership with the Connecticut State Police, the Office of the Attorney General, and the Department of Consumer Protection, has issued a consumer alert with helpful tips to avoid scams like these. You can find this alert here.
