AML Software has initiated legal action against Bitcoin ATM operator Athena Bitcoin, alleging attempts to illegally acquire its source code. The lawsuit, detailed in a 16-page complaint filed on Tuesday, claims that Athena engaged in copyright infringement and misappropriation of trade secrets in an effort to seize control of 3,000 ATMs from a third-party provider starting in 2023.
Registered in Illinois, AML Software specializes in developing the core code that powers Bitcoin ATMs, facilitating transactions where customers exchange cash for cryptocurrency. The company emphasized that its code is protected under copyright law. The complaint outlines several defendants, including Jordan Mirch, who is accused of overseeing companies that are allegedly involved in misappropriating AML’s software in coordination with Athena. Mirch is purportedly the “motivating force” behind the alleged scheme.
The complaint references a past situation involving a company called SandP Solutions, which faced operational restrictions in Ohio, significantly impacting its financial viability. As CEO of Taproot Acquisition Enterprises, Mirch reportedly managed to acquire SandP Solutions’ Bitcoin ATMs through fraudulent representations and unlawful activities, a matter mentioned in a separate lawsuit filed in Illinois. The ATMs obtained under these conditions are claimed to be powered by AML Software’s code.
The lawsuit further reveals that Athena had previously expressed interest in purchasing AML Software’s code but opted not to move forward for undisclosed reasons. Subsequently, a developer from AML Software was allegedly contacted by Mirch through Taproot and engaged as a consultant; however, the intention was allegedly to illicitly obtain AML’s proprietary source code rather than create new software.
Despite AML Software’s lack of authorization for the code’s potential sale, it is claimed that Mirch and Taproot established a side agreement with Athena for the code’s transfer along with the ATMs. Athena operates approximately 3,600 Bitcoin ATMs across the country, according to information on its website.
In a related note, recent developments saw Athena entering a $9 million settlement agreement earlier this month, which purportedly granted the company “immediate ownership of ATMs and source code,” while dissolving a revenue-sharing agreement with Taproot and its affiliates. Following this announcement, Athena’s stock saw a 5% increase, though it has been significantly devalued, experiencing a drop of 84% year-to-date.
In addition to the lawsuit from AML Software, Athena is facing legal challenges in Washington, D.C., where Attorney General Brian L. Schwalb has alleged that the company profited from scams primarily targeting elderly customers, which reportedly involved hidden fees of up to 26%. Efforts from local law enforcement to assist victims in recovering lost funds have sometimes met with resistance, as courts have often ruled in favor of the ATM operators regarding ownership of the cash involved.
In response to growing concerns about these fraudulent activities, U.S. Senator Cynthia Lummis (R-WY) has announced plans, alongside Senator Kirsten Gillibrand (D-NY), to tackle the issue through potential market structure legislation aimed at enhancing consumer protections.
