Bitcoin of America, one of the United States Bitcoin ATM service providers has halted operations as a result of lack of licensing.
The Department of Banking announced in a statement that Bitcoin of America had failed to obtain proper licensing to operate in the state of Connecticut. According to the department, the ATM provider was issued an order to halt operations. The consent order was enforced when four Connecticut users lost a total of $86,000 from scams related to the Bitcoin ATM kiosks from Bitcoin of America. The statement notes:
“Bitcoin of America had been operating Virtual currency kiosks in Connecticut without obtaining the proper license… of dollars. As a result of the consent order, Bitcoin of America made restitution to these consumers totaling $86,000. Following a criminal indictment, Bitcoin of America is winding down operations here in Connecticut.”
In the notice, Commissioner Jorge Perez warns users against using digital currency ATMs without investigating their licensing and registration in the country or state. He stated that scammers often use ATMs to trick users to deposit cash into the machine and steal their funds when the user expects a crypto transaction to occur.
At the time, Bitcoin of America was not up to date with licensing. Developing and implementing legislation is currently in process in the state of Connecticut to protect users from scams. The Bitcoin ATM operator is required to be licensed as a money transmitter as it allows the transfer of user funds to be sent to third parties. Failing this, Bitcoin of America has had to halt all operations from its kiosks in the state.
A warning of Bitcoin ATM scams to avoid
To avoid more users falling prey to scams, the State Police, Department of Banking, Office of the Attorney General and the Connecticut Department of Consumer Protection have all sent an alert to citizens to warn them of the possibility of using unlicensed crypto and Bitcoin ATMs. The alert warns of the various schemes that scammers use to steal from consumers. Included are “pig butchering scams”, “romance scams”, investment advice and posing as a financial expert, false anti-virus software scams, and threats to use fear to illicit a response from users.
“It is important for consumers to keep in mind that only scammers demand advance payment in cryptocurrency, gift cards, or money transfers. No legitimate business will request advance payment in cryptocurrency, including through a virtual currency kiosk. Cryptocurrency payments made to scammers via virtual currency kiosks are typically not reversible. Once sent, the money is gone.”