Cryptocurrency and Bitcoin ATM provider Bitcoin of America consented with the Connecticut Department of Banking to halt its operations owing to a lack of licensing.
In a statement released on May 22, the Department of Banking highlighted that Bitcoin of America failed to obtain a proper license to operate Bitcoin ATM kiosks in the state. However, the consent order was enforced after four Connecticut consumers lost tens of thousands of dollars in a scam involving using the kiosks in question. The state revealed:
“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.”
The episode led Commissioner Jorge Perez to issue a warning against the use of unlicensed crypto kiosks. He stated that investors are often urged and tricked into depositing cash into the kiosks and transferring an equal amount of cryptocurrencies to the scammers.
Bitcoin of America’s business model — which allows the transfer of consumers’ funds to third parties — was required to be licensed as a money transmitter. To address the issue on a wider scale, the Department of Banking and the Connecticut State Police jointly submitted a bill — HB 6752 An Act Concerning Digital Assets — that demands the licensing of virtual currency kiosks as money transmitters in the state of Connecticut.
In addition, the two departments, along with the Office of the Attorney General, and the Department of Consumer Protection issued a scam alert against the use of unlicensed crypto and Bitcoin ATMs.
In March, 52 Bitcoin of America ATMs and kiosks were confiscated in Ohio after being suspected for being used in scams.
Geopolitical instability across the globe compounded by a crackdown on unlicensed operations had an adverse effect on the overall Bitcoin ATM network. In March alone, 3,627 crypto ATMs went offline, recording the largest monthly decline of crypto ATMs.
As shown above, net crypto ATM installations declined for four months between September 2022 and March 2023.