Summary
- Missouri's Attorney General Catherine Hanaway is pursuing a lawsuit against CoinFlip, seeking $1.83 million in penalties and a prohibition on its operations.
- CoinFlip has rejected the allegations as "meritless," asserting that it has strong consumer protections in place and calling for the state to target actual criminals.
- This legal dispute highlights a national crackdown, occurring shortly after Bitcoin Depot filed for Chapter 11 bankruptcy.
On Wednesday, Missouri Attorney General Catherine Hanaway announced legal action against CoinFlip, a Bitcoin ATM provider, as part of a broader initiative to safeguard vulnerable seniors from a surge in scams.
Hanaway's lawsuit accuses CoinFlip, which is already entangled in a significant lawsuit in Iowa, of "knowingly facilitating fraudulent transactions" while profiting from unclear and potentially exploitative fees, as stated in her announcement.
"I will utilize every available resource to expose the deceitful scammers hiding behind screens and ensure they are held accountable," she remarked, likening Bitcoin ATMs to getaway vehicles for criminals.
This lawsuit is the latest instance of state actions aimed at restricting companies that allow cash-to-crypto exchanges within their jurisdictions. Hanaway is demanding that CoinFlip be barred from operating in Missouri, a state known for its practical and skeptical residents.
Additionally, the Attorney General is seeking $1.83 million in civil penalties against CoinFlip. Despite CoinFlip branding itself as one of the largest Bitcoin ATM operators globally and emphasizing its commitment to consumer protection, officials argue that its measures are inadequate.
A representative from CoinFlip characterized Hanaway's lawsuit as "meritless," suggesting it is a misguided effort against a company that has advocated for consumer protection laws for cryptocurrency kiosks for years.
"Instead of using taxpayer resources on a licensed and regulated business, the Attorney General's office should focus on identifying and stopping the criminals targeting Missourians," they stated, indicating the company's readiness to contest the lawsuit in court.
Hanaway's initiative comes amidst a rising wave of scams that primarily target elderly individuals, where fraudsters impersonate authority figures or tech professionals to convince victims to transfer cryptocurrency under false pretenses. For instance, a recent scheme in Massachusetts involved threats of arrest for "missed jury duty" according to police warnings.
Authorities have reported alarming financial losses, with Americans indicating $389 million in losses linked to such scams last year, as per FBI statistics. Hanaway mentioned that state law enforcement analysts have identified about 350 cases involving Bitcoin ATMs over the past two years.
CoinFlip operates 140 kiosks in Missouri, located in places like gas stations and vape shops. The state reportedly has a total of 429 Bitcoin ATMs, as per Coin ATM Radar. Some states have even enacted laws banning these machines altogether, with Tennessee being one example.
As legal challenges against Bitcoin ATM operators continue to mount, leading firms are feeling the pressure. Earlier this week, Bitcoin Depot filed for Chapter 11 bankruptcy, citing "increased litigation costs" in a prior SEC filing. Consequently, the company shut down its entire network of over 9,000 machines.