The BitGo and BitGo-branded Bitcoin ATMs have been ordered by a federal judge in Washington State to cease operations, after it was revealed that their operators were engaged in illegal activities and that they were running their machines with unauthorized software.
BitGo has been in dispute with the US Securities and Exchange Commission over its ATM network and its alleged violations of federal anti-money laundering laws.
The two firms have been at loggerheads for months and have been embroiled in a dispute with federal regulators over the matter.
The US Attorney’s Office for the District of Columbia filed a lawsuit against BitGo in August 2017, alleging that the company failed to properly control its ATM operations.
Bitgo responded by filing a counter-suit against the SEC on November 11.
The case will be heard by a judge later this month.
The suit states that the two companies “knowingly and intentionally engaged in multiple violations of the federal money laundering laws and the Bank Secrecy Act.”
The judge will decide whether to make the proposed settlement with BitGo public.
BitGO and its affiliates are among the largest Bitcoin ATM operators in the US.
The company also operates ATMs in New York City, Las Vegas and Atlanta, Georgia.
On Wednesday, the company posted a notice on its website, saying it was terminating its service with the Federal Reserve Bank of New York.
“Due to the actions of these criminals and their attempts to take advantage of the vulnerable customer, Bitgo will not be accepting new orders and will discontinue its Bitcoin ATMS services at the end of the month,” the notice read.
BitGox CEO Adam Back told CoinDesk that the decision was a difficult one to take.
“I think it’s hard for us to accept,” he said.
“But we’ve been working hard with the federal authorities, and we’ll continue to do so.”
Back said that the Federal Deposit Insurance Corporation and the Bureau of Alcohol, Tobacco, Firearms and Explosives had been involved in the matter, and that the court’s decision would not affect the two regulators’ ability to monitor BitGo’s operations.
He also said that BitGo had hired a law firm to represent it, which would help it fight the lawsuit.
BitMex is the second major Bitcoin ATM operator to terminate its service after the SEC sued the company last month.
In November, BitMEX announced that it was ending its partnership with the BitPay exchange platform.
“While we were disappointed that we were unable to meet the court order, we’re happy that the judge is considering our side of the story,” BitMec said in a statement.
“We continue to believe that our compliance with all applicable laws and regulations is a top priority, and will continue to take all steps necessary to ensure BitPay’s continued success.”
BitGo CEO Adam back in a press conference in November.
“They’re trying to get the money laundering charges against us litigated and it’s a bad outcome,” he told CoinMarketCap.
“So the question is, will they actually litigate and get a verdict against them?
BitPay CEO and co-founder Fred Ehrsam told CoinJournal that the BitGo decision had nothing to do with the case. “
And they won’t have any incentive to work with us because we will never be able to make a profit and we will always lose money and that’s why I think BitGo is going to be a great competitor.”
BitPay CEO and co-founder Fred Ehrsam told CoinJournal that the BitGo decision had nothing to do with the case.
“As the BitGoke CEO and founder, I have full confidence in Fred Ehresam, the Bitgo team, and their compliance with US laws and regulators,” he added.
“BitGo is an American company that is fully committed to the US dollar and our US regulatory system, and to its customers and the millions of Americans that rely on them.
This decision is simply the result of their illegal activities, which are completely inconsistent with BitGogo’s stated goals and principles.”
The BitMox and BitGapo companies were involved in a similar dispute with regulators last year.
In May, a federal court ordered BitMepox to pay $1.9 million to US prosecutors in the case, which resulted in the shutdown of BitGolems and BitMeps.
In December, a different US judge ruled that the companies could not continue operating in the state of California, after the two operators were ordered to cease operating by regulators.
The companies said that they had not received any notification of their latest settlement from the federal government.
“In light of the latest ruling, BitGoles and BitMpos have decided to terminate their operations in California.
We are working closely with the relevant authorities to determine the next steps for our businesses,” the companies said in their statement.
The regulators also ordered BitGo, BitMpo and BitGa on Thursday to cease accepting new business from third parties and refund customers.
“The proposed settlement resolves