Cryptocurrency and Bitcoin ATM provider, Bitcoin of America, consented with the Connecticut Department of Banking to halt its operations due to a lack of licensing. Banking Commissioner Jorge Perez announced that the Department of Banking has settled with Bitcoin of America (BoA) through a consent order agreed to by both parties. As per the Consent Order, the Commissioner will not take any future enforcement action against BoA based on the allegations.
Further, the bank Commissioner will have the right to take enforcement action against BoA, first, upon the violation of this Consent Order. Also, if the Commissioner determines that compliance with the terms is not being observed or if any representation made by BoA is subsequently discovered to be untrue.
It also highlights that Bank of America will not take any action or make or permit to be made any public statement, including in regulatory filings, any proceeding in any forum or otherwise, denying, directly or indirectly, any allegation referenced in this Consent Order.
BoA had been operating Virtual currency kiosks in Connecticut without obtaining the proper license. Virtual currency kiosks allow consumers to purchase virtual currency with cash. Recently, it was reported that four Connecticut consumers who used these Kiosks fell victim to scams, losing tens of thousands of dollars. As a result of the consent order, Bitcoin of America made restitution to these consumers totalling $86,000.
Following a criminal indictment, Commissioner Jorge Perez said, “This case highlights the need to be cautious when using virtual currency kiosks.” He further added “Scammers are preying upon consumer’s vulnerabilities and tricking them into depositing cash into kiosks, which can be found throughout the state. The Department is taking steps to be sure that the owners and operators of these kiosks are properly licensed and adhere to the law.”
The Department of Banking became aware of four Connecticut consumers who lost money to scammers through kiosks operated by Bitcoin of America. These consumers fell victim to scammers who convinced them they were from legitimate companies. The scammers directed the consumers to deposit cash into these Virtual Currency Kiosks with a QR code, provided by the scammer, to supposedly safeguard their money.
The Department of Banking and the Connecticut State Police have submitted a bill in this legislative session. The bill would allow the Banking Commissioner to adopt regulations around virtual currency and other digital assets. In addition, it would explicitly require that virtual currency kiosks be licensed as money transmitters in the state, giving the Commissioner jurisdiction over these machines and their operators.