Bitcoin Depot’s ATMs Face Compliance-Related Ban in Connecticut

The world’s largest bitcoin ATM operator has been temporarily barred from conducting business in Connecticut.

Bitcoin Depot had its money transmission license suspended by the state’s banking commissioner last week due to allegations that it had violated compliance requirements, overcharged customers and failed to refund fraud victims.

The action was reported Wednesday (March 18) by digital asset-focused media outlet Decrypt, which also noted that Bitcoin Depot recently said in a securities filing that it expects to list unremediated “material weaknesses” in its internal controls when it submits its annual report.

The company said those issues did not lead to material errors or omissions in its earlier financial statements and are not expected to change the numbers.

PYMNTS has contacted Bitcoin Depot for comment but has not yet gotten a reply.

According to the banking commissioner’s order, regulators found that “public safety and welfare imperatively require emergency action” to suspend the company’s license.

The state said it found 1,000 instances where the company charged fees higher than the legal limit of 15%, and that translated to a little more than $150,000 in needless fees.

Regulators also allege that Bitcoin Depot failed to fully refund some people who were tricked into sending funds to scammers through its machines, and while the company produced a list of customers whose refund requests were approved, it was “unclear” whether it records when a “refund is requested but not provided.”

Connecticut’s action comes amid a wave of calls for bans on crypto ATMs in response to a wave of financial crime. As covered here in March, several states are strengthening their laws governing the machines, while other jurisdictions are pushing to outlaw them entirely.

The Federal Trade Commission (FTC) has argued that as bitcoin ATMs have been installed in more locations, they have turned into a “payment portal for scammers.”

The commission said in 2024 that scammers were increasingly using bitcoin ATMs as part of their government impersonation, business impersonation and tech support scams.

However, crypto industry experts argue that bans won’t do away with fraud completely, and could hurt consumers.

“Eliminating them may reduce certain fraud vectors, but it also removes one of the last public-access tools for financial privacy and cash-to-crypto conversion,” Alex Davis, founder and CEO of blockchain company Mavryk, told CNBC.

“The question isn’t whether crypto ATMs should exist; it’s whether society is comfortable with a future where every dollar must pass through a fully surveilled, fully permissioned gatekeeper.”