Bitcoin ATM firm allegedly profited from crypto fraud via unlicensed kiosks: Prosecutors

by · March 6, 2023

A Bitcoin (BTC) technology firm and its executives have been indicted for allegedly operating unlicensed crypto kiosks in Ohio that knowingly benefited victims of cryptocurrency scams.

S&P Solutions, which operated as Bitcoin of America, along with 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 the state.

A Cuyahoga County grand jury returned the indictment March 1 against the company, its owner and founder, Sonny Meraban, manager Reza Meraban and company attorney William Suriano. The trio were arrested last week and search warrants were executed at their homes in Florida and Illinois.

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.

Rogalski commented during a press conference that “these ATMs are ready for fraudsters,” adding that they:

“Tell the victims, who are often elderly or otherwise vulnerable, to specifically go to Bitcoin by US ATMs, take money that they have withdrawn from their savings accounts or 401Ks.”

They are then asked to put the money into the machine in exchange for BTC in a wallet they believe is theirs but has no control over, he explained.

He added that in one case, an elderly gentleman lost $11,250 in three transactions to one of the shady kiosks in less than an hour to this scam.

Product image of a Bitcoin of America kiosk. Source: Bitcoin of America

Meanwhile, the company allegedly pocketed a 20% transfer fee each time this happened and continued to do so even after learning they were fraudulent.

The indictment also accuses the company of being able to operate due to “written misrepresentations regarding the nature of its business to government agencies,” helping it operate the kiosks without a money transfer license, according to a March 3 Law360 report.

Related: Crypto ATMs Emerge as Popular Method for Crypto Fraud Payments – FBI

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 Services Task Force for Cyber ​​Fraud and Money Laundering.

In October, the FBI’s Miami Field Office warned that crypto ATMs were becoming a popular tool for fraudsters to defraud victims in a growing trend of scams.