A Denver-based company that essentially operated ATMs for bitcoin has shut down.
ModernTender, legally known as Centazo LLC, said in a lawsuit filed this week that it had to cease operations after a Memphis-based bank decided to close the company’s bank account without warning following multiple large cash deposits.
The lawsuit filed in Denver District Court against Evolve Bank & Trust accuses the bank, which has a Denver office, of breach of contract and misrepresentation.
“Due to the closure of Centazo’s account, in violation of the Agreement and without valid basis, Centazo was unable to continue to operate its business and was forced to close, resulting in losses to Centazo in excess of $1 million,” the lawsuit reads.
Evolve Bank declined to comment for this story.
ModernTender’s “bitcoin teller machines,” first put out in 2015, allowed users to buy bitcoin with cash. According to the company’s website, it once had nine machines in Colorado, including at downtown Denver’s Amante Coffee and Aurora’s Stanley Marketplace, and four machines in Texas. A staffer at Amante Coffee said Wednesday that the machine had been removed.
According to the lawsuit filed last week, ModernTender Managing Member Eric Weissmann began searching for a new bank earlier this year, after the bank the company had been using gave ModernTender 90 days’ notice that its account would be closed.
The lawsuit doesn’t state why that account was closed. A voicemail left at the phone number on ModernTender’s website was not returned. Attorney J. Aaron Atkinson of Denver’s Hackstaff & Snow, who is representing ModernTender in the lawsuit, did not respond to a request for comment.
According to the lawsuit, while searching for a new bank, Weissmann contacted Evolve in part because an online article published in February indicated that the bank “wanted to be involved with financial technology start-up companies.”
Weissmann alleges that he submitted a document to Evolve stating ModernTender planned to deposit between $50,000 and $500,000 in cash each month, and provided prior bank statements showing the company had deposited $335,000 in cash in one recent month. Evolve said it did not have an issue with that planned activity and understand the cryptocurrency nature of the business, the lawsuit claims.
Before opening a bank account for ModernTender, Evolve did a “due diligence investigation” on the company, for which it charged the ModernTender $1,000, according to the lawsuit. The account was opened in mid-to-late April.
ModernTender deposited $54,000 in cash into the account on April 24, followed by $205,000 around May 1, according to the lawsuit.
Evolve then asked ModernTender not to make large cash deposits, and on May 3 notified the company it had closed the account, the lawsuit says.
According to the lawsuit, prior to the account opening, Evolve did tell ModernTender that armored car and cash vault services eventually would be required for large cash deposits, but the bank was aware that it would take time for the company to make those arrangements and that ModernTender planned to make deposits in person until then.
The lawsuit said ModernTender has suffered losses of more than $1 million because of its forced closure.