Four customers of Bitcoin of America were scammed at the company’s unlicensed kiosks, resulting in a settlement of $86,000, the company’s exit from Connecticut and a new proposed bill.

Scammers convinced the victims they were paying legitimate bills by purchasing virtual currency at the company’s kiosks. The funds were deposited and the virtual currency transferred to the scammers.

Because the kiosks transferred the consumers’ funds to third parties, Bitcoin of America was required to be licensed as a money transmitter, which it did not, the Department of Banking said. The department’s consent order required Bitcoin of America to pay restitution to the customers and, following a criminal indictment, the company will cease operating in the state altogether.

“This case highlights the need to be cautious when using virtual currency kiosks,” Commissioner Jorge Perez said in a statement. “Scammers are preying upon consumer’s vulnerabilities and tricking them into depositing cash into kiosks, which can be found throughout the state. The department is taking steps to be sure that the owners and operators of these kiosk are properly licensed and adhere to the law.”

The Department of Banking and the Connecticut State Police have submitted a bill this legislative session, HB 6752, An Act Concerning Digital Assets, to help combat this growing problem. This bill would allow the banking commissioner to adopt regulations around virtual currency and other digital assets. In addition, it would explicitly require that virtual currency kiosks be licensed as money transmitters in the state, giving the commissioner jurisdiction over these machines and its operators. The bill would require a clear set of consumer disclosures to be given on screen, which the consumer must affirmatively agree to. It also would provide additional protections for first-time virtual currency kiosk users.