May 22, 2023
Banking Commissioner Announces Settlement with Bitcoin of America
Recovers $86,000 for Connecticut Consumers
HARTFORD — Banking Commissioner Jorge Perez announced today that the Department of Banking has reached a settlement with Bitcoin of America through a consent order agreed to by both parties. Bitcoin of America had been operating Virtual currency kiosks in Connecticut without obtaining the proper license. Virtual currency kiosks allow consumers to purchase virtual currency with cash. Four Connecticut consumers who patronized 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 totaling $86,000. Following a criminal indictment, Bitcoin of America is winding down operations here in Connecticut.
“This case highlights the need to be cautious when using virtual currency kiosks,” said Commissioner Jorge Perez. “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 kiosk are properly licensed and adhere to the law.”
In this case, the Department of Banking became aware of four Connecticut consumers who lost money to scammers through kiosks operated by Bitcoin of America. Because the kiosks transferred the consumers’ funds to third parties, Bitcoin of America was required to be licensed as a money transmitter. These consumers fell victim to scammers who convinced them they were from legitimate companies (including banks, electrical and internet supply 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. Unbeknownst to the consumer, they were depositing the cash into the kiosk, purchasing virtual currency which was then transmitted to the scammer’s virtual wallet. This resulted in the consumer losing their funds.
To further combat this growing problem, The Department of Banking and the Connecticut State Police have submitted a bill this legislative session, HB 6752 An Act Concerning Digital Assets. This 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 its operators. The bill would require a clear set of consumer disclosures to be given on screen, which the consumer must affirmatively agree to. It also would provide additional protections for first-time virtual currency kiosk users.
Commissioner Perez extends his gratitude to the Connecticut State Police for their assistance in resolving this case.
To better assist consumers, the Department of Banking, partnering with the Connecticut State Police, the Office of the Attorney General, and the Department of Consumer Protection has issued a consumer alert with helpful tips to avoid becoming a victim of these types of scams. The alert can be found here.
Matt Smith, 860-240-8105