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Bitcoin ATM giant forced to cease operations after statewide scam

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TL;DR Breakdown

  • Bitcoin of America has faced regulatory action in Connecticut, leading to the suspension of its operations within the state. 
  • The order was enforced following reports of four Connecticut consumers falling victim to a scam involving the mentioned kiosks.
  • As part of the resolution, Bitcoin of America agreed to provide restitution to the affected consumers, totaling $86,000.

Bitcoin of America, a prominent cryptocurrency ATM provider, has faced regulatory action in Connecticut, leading to the suspension of its operations within the state. The Connecticut Department of Banking emphasized that Bitcoin of America failed to acquire the necessary license to operate Bitcoin ATM kiosks, which ultimately led to the consent order. The order was enforced following reports of four Connecticut consumers falling victim to a scam involving the mentioned kiosks, resulting in significant financial losses amounting to tens of thousands of dollars.

As part of the resolution, Bitcoin of America agreed to provide restitution to the affected consumers, totaling $86,000. Additionally, the company is winding down its operations in Connecticut following a criminal indictment. Jorge Perez, the banking commissioner, issued a warning against the usage of unlicensed cryptocurrency kiosks, shedding light on the deceptive practices employed by scammers. Investors are often lured into depositing cash into the kiosks and then transferring an equivalent amount of cryptocurrencies to the fraudsters.

Bitcoin of America requirements

Bitcoin of America, known for facilitating fund transfers to third parties, is required to obtain a license as a money transmitter. Recognizing the need for more comprehensive regulations and consumer safeguards, legislation is currently being pursued in the state legislature to regulate digital currency kiosks as money transmitters in Connecticut. The objective is to enhance oversight and prevent fraudulent activities associated with unlicensed crypto ATMs.

In response to the incident, the Connecticut State Police, the Department of Banking, the Office of the Attorney General, and the Department of Consumer Protection jointly issued a scam alert cautioning individuals against using unlicensed crypto and Bitcoin ATMs. The coordinated effort aims to raise awareness and protect consumers from falling victim to similar scams in the future.

This recent development in Connecticut adds to the challenges faced by the Bitcoin ATM network on a broader scale. The global geopolitical instability, coupled with increased crackdowns on unlicensed operations, has had a negative impact on the overall Bitcoin ATM industry. In March alone, a staggering 3,627 crypto ATMs went offline, marking the largest monthly decline ever recorded in the history of crypto ATMs. This trend highlights the growing need for regulatory measures to address security concerns and establish a safer environment for cryptocurrency transactions.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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