A Bitcoin technology company and its officials have been charged with operating illegal cryptocurrency kiosks in Ohio that intentionally benefited from people who had fallen for cryptocurrency scams.
In connection with the operation of more than 50 unlicensed cryptocurrency kiosks throughout the state, S&P Solutions, which traded as Bitcoin of America, and three of its executives are accused of money laundering, conspiracy, and other offences.
On March 1, a grand jury in Cuyahoga County handed down an indictment against the business, its creator and owner Sonny Meraban, manager Reza Meraban, and legal representative William Suriano. Following the arrest of the group last week, search warrants were carried out at their Florida and Illinois homes.
The lack of Anti-Money Laundering safeguards in the company’s systems allowed romance fraudsters, law enforcement impersonators, and “robocallers” to transfer money out of users’ cryptocurrency wallets, according to the prosecuting attorney Andrew Rogalski.
In a press conference, Rogalski said, “These ATMs are ready-made for con artists,” adding that they:
Instruct the victims, who are frequently elderly or otherwise vulnerable, to go especially to American Bitcoin ATMs and withdraw money from their savings or 401Ks.
They are then told to insert the cash into the machine in exchange for BTC in a wallet that they believe to be theirs but do not actually have access to, he said.
He continued by saying that in one instance, a senior citizen lost $11,250 over the course of three transactions at one of the dubious kiosks in less than an hour.
The business allegedly kept 20% of the transfer charge each time this happened, even after realising the transactions were bogus.
The corporation is also charged with operating the kiosks without a money transfer licence by making “written misrepresentations regarding the nature of their business to regulatory bodies,” according to a March 3 Law360 story.
The company has more Bitcoin ATMs in Ohio and other states, but authorities this week seized 52 of them. According to Rogalski, Bitcoin of America earned $3.5 million in 2021 from cash deposits made at these illegal kiosks.
Authorities think the company has been functioning since 2018 while dodging regulatory safeguards and financial compliance obligations.
According to reports, the Cyber Fraud and Money Laundering Task Group of the United States Secret Service was in charge of looking into the company and its management.
In October, the FBI’s Miami Field Office issued a warning that a growing number of “pig butchering” scams were using cryptocurrency ATMs as a common method of victimisation.