The local Department of Banking said Bitcoin of America illegally installed crypto machines in the state.
The agency noted that four local residents who used these devices have already been victims of cryptocurrency fraud, losing tens of thousands of dollars.
Attackers posed as employees of banks or Internet companies, convincing trusting people to deposit cash through these crypto-machines, giving them a special QR-code, and then send the cryptocurrencies to the specified address.
Bitcoin of America settled the lawsuit and paid the affected users a total of $86,000 in compensation. In addition, Bitcoin of America must wind down its operations in Connecticut.
Earlier, Connecticut lawmakers introduced a digital asset bill requiring mandatory licensing of crypto operators in the state.
The bill also requires clear consumer information, which would provide additional user protection.
If this law passes, the Department of Banking will expand its authority over virtual currencies and cryptocurrencies.
“This case speaks to the need for caution when using cryptocurrencies.
Fraudsters trick users into depositing cash through them, and similar crypto machines can be found all over the state.
The department is taking steps to ensure that the owners and operators of these machines are licensed and comply with the law,” said Commissioner Jorge Perez.
UK law enforcers have also stepped up checks for illegally operating crypto machines.
A few weeks ago, the UK Financial Conduct Authority (FCA) conducted raids in three cities: Exeter, Nottingham and Sheffield, and in March in East London.