Bitcoin of America indicted for operating unlicensed kiosks
Bitcoin of America, a Bitcoin technology firm, and three of its executives are facing charges of money laundering, conspiracy and other crimes related to the operation of more than 50 unlicensed crypto kiosks in Ohio that knowingly took advantage of victims of cryptocurrency scams. The firm, which operated as S&P Solutions, allegedly collected a 20% transfer fee each time a fraud occurred and continued to do so even after learning they were fraudulent.
According to prosecutor Andrew Rogalski, romance scammers, law enforcement impersonators and “robocallers” exploited the lack of anti-money laundering protections in the firm’s systems to transfer funds from users’ crypto wallets. These scammers directed victims, who are often elderly or otherwise vulnerable, to specifically go to Bitcoin of America ATMs, take money that they have withdrawn from their savings accounts or 401Ks, and deposit the cash into the machine in exchange for BTC in a wallet they think is theirs but have no control over.
During a press conference, Rogalski commented that “these ATMs are ready-made for fraudsters,” adding that they take advantage of victims who are often elderly or otherwise vulnerable. In one case, an elderly gentleman lost $11,250 in three transactions to one of the creepy kiosks in less than an hour to this scam.
The firm and its executives allegedly operated the kiosks without a money transfer license and were able to do so by making written misrepresentations regarding the nature of their business to government agencies. Authorities seized 52 Bitcoin ATMs last week, but the firm has more in Ohio and other states. Bitcoin of America earned $3.5 million from cash deposits at these illegal kiosks in 2021, Rogalski said.
Officials believe the firm has been operating and evading regulatory safeguards and financial compliance requirements since 2018. The investigation into the firm and its executives was reportedly led by the United States Secret Service’s Cyber Fraud and Money Laundering Task Force.
This indictment comes after the FBI’s Miami Field Office warned in October that crypto ATMs were becoming a popular tool for fraudsters to defraud victims in a growing trend of scams. It highlights the importance of proper regulation and compliance in the cryptocurrency industry to protect vulnerable individuals from fraudulent activities.
