A Bitcoin (BTC) technology company and its executives have been indicted for allegedly operating an unlicensed crypto kiosk in Ohio that knowingly benefited victims of cryptocurrency scams.
S&P Solutions, which operates 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 country.
A Cuyahoga County grand jury returned an indictment on March 1 against the firm, 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 homes in Florida and Illinois.
3 people, 1 business charged in cryptocurrency fraud; avoid Bitcoin ATMs from America, Cuyahoga Co. prosecutors. said https://t.co/LaR1L2E1yH
— News 5 Cleveland (@WEWS) March 2, 2023
According to prosecutor Andrew Rogalski, romance scammers, law enforcement impersonators, and “robocallers” exploit the lack of anti-money laundering protection in company systems to transfer funds out of users’ crypto wallets.
Rogalski commented during the press conference that “these ATMs are ready for scammers,” adding:
“Direct victims, who are often elderly or vulnerable, specifically to Bitcoin from American ATMs, taking money they have withdrawn from savings accounts or 401Ks,”
He was then told to put money into a machine in exchange for BTC in a wallet he thought was his but over which he had no control, he said.
He added that an elderly man lost $11,250 in three transactions to one of the unscrupulous kiosks in an hour due to this scam.
Meanwhile, the company allegedly charged a 20% transfer fee each time it happened and continued to do so even though they knew it was a scam.
The indictment also alleges the company was able to operate because of “written misrepresentations about the nature of its business to government agencies,” helping to operate kiosks without money transfer licenses, according to a March 3 report from Law360.
related: Crypto ATMs are emerging as a popular method for crypto fraud payments – FBI
52 Bitcoin ATMs were seized last week, but the firm has more in Ohio and other states. Bitcoin of America generated $3.5 million in revenue from cash deposits at unauthorized kiosks in 2021, Rogalski said.
Officials believe the company has been operating and avoiding regulatory protections and financial compliance requirements since 2018.
The investigation into the company and its executives is reportedly being led by the United States Secret Service’s Cyber Fraud and Money Fraud Task Force.
In October, the FBI’s Miami Field Office warned that crypto ATMs are becoming a popular vehicle for scammers to defraud victims with the “pig murder” scam trend.