Bitcoin of America Ordered to Halt Unlicensed Operations
Bitcoin of America, a prominent cryptocurrency and Bitcoin ATM provider, has consented to the Connecticut Department of Banking’s directive to cease its operations due to failure to secure a money transmitter license.
An Absence of Licensing Incites Action
On May 22, the Department of Banking revealed that Bitcoin of America failed to procure a valid license to operate Bitcoin ATM kiosks within the state. The consent order materialized after four Connecticut residents lost tens of thousands of dollars in a fraudulent scheme connected to the said kiosks. The state department noted:
“Bitcoin of America compensated these consumers with a total of $86,000. Following a criminal indictment, Bitcoin of America is now in the process of winding down its operations in Connecticut.”
A Warning against Unlicensed Crypto Kiosks
This incident led Commissioner Jorge Perez to caution against the use of unlicensed crypto kiosks. He pointed out that investors are often enticed and deceived into depositing cash into these kiosks and then transferring an equivalent amount of cryptocurrencies to fraudsters.
Bitcoin of America, which allows the transfer of consumers’ funds to third parties, is mandated to have a money transmitter license. New legislation is under consideration in the state legislature to strengthen regulations, augment consumer protections, and necessitate the licensing of digital currency kiosks as money transmitters within Connecticut.
State Agencies Issue Scam Alert
The Connecticut Department of Banking, in conjunction with the Office of the Attorney General and the Department of Consumer Protection, issued a scam alert regarding the use of unlicensed crypto and Bitcoin ATMs.
Bitcoin of America’s Troubles Extend Beyond Connecticut
Back in March, 52 Bitcoin of America ATMs and kiosks were seized in Ohio on suspicions of being utilized in scams.
A Global Downtrend in Crypto ATM Network
Geopolitical instability, coupled with a crackdown on unlicensed operations, has negatively impacted the global Bitcoin ATM network. March witnessed the withdrawal of 3,627 crypto ATMs, marking the most significant monthly decline in crypto ATMs to date.
As illustrated, there has been a steady decline in net crypto ATM installations for four months, from September 2022 to March 2023. These recent incidents highlight the pressing need for appropriate regulations and consumer protections in the rapidly evolving cryptocurrency sector.