Legal
The Connecticut Department of Banking released a statement on May 22nd, indicating that Bitcoin of America had not obtained the necessary license to operate Bitcoin ATM kiosks in the state. Unfortunately, the consent order had to be enforced after four Connecticut consumers reportedly fell victim to a scam involving the kiosks in question, collectively losing tens of thousands of dollars.
Bitcoin of America made restitution to these consumers, totaling $86,000. Following a criminal indictment, the company is now winding down its operations in Connecticut. The state’s banking commissioner, Jorge Perez, has issued a warning against the use of unlicensed crypto kiosks, citing the tendency for investors to be urged and tricked into depositing cash into the kiosks and transferring an equal amount of cryptocurrencies to scammers.
Bitcoin of America, which allows the transfer of consumers’ funds to third parties, is required to be licensed as a money transmitter. Legislation is currently being developed and is making its way through the state legislature to put more regulations and consumer protections in place, as well as demanding the licensing of digital currency kiosks as money transmitters in Connecticut.
Connecticut State Police, Department of Banking, Office of the Attorney General, and the Connecticut Department of Consumer Protection have jointly issued a scam alert against the use of unlicensed crypto and Bitcoin ATMs.
It is not just Connecticut that is experiencing issues with unlicensed operations. In Ohio, for example, 52 Bitcoin of America ATMs and kiosks suspected of being used in scams were confiscated in March. This is reflective of a global trend, with geopolitical instability and a crackdown on unlicensed operations having a negative effect on the overall Bitcoin ATM network. In March alone, 3,627 crypto ATMs went offline, recording the largest-ever monthly decline of crypto ATMs.
Net crypto ATM installations declined for four months between September 2022 and March 2023. This highlights the need for industry-wide improvements in regulation, consumer protection, and licensing.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
