Coinme Pays $300K Fine in California’s First Crypto Kiosk Enforcement Action
Seattle-based cryptocurrency ATM operator Coinme has agreed to pay a $300,000 penalty for violating California’s crypto ATM regulations, marking the first enforcement action by the California Department of Financial Protection and Innovation (DFPI) under the state’s Digital Financial Assets Law.
Violations of Transaction Limits and Disclosure Requirements
The fine follows Coinme’s failure to comply with California’s legal cap on daily crypto ATM transactions, which limits customers to $1,000 per day. Coinme’s kiosks, which are situated in grocery and convenience stores throughout California, did not adhere to these transaction limits. Additionally, the company omitted mandatory disclosures on customer receipts, as required by state law.
The Digital Financial Assets Law was implemented last year to regulate crypto ATM operations and mitigate the growing risk of scams and fraudulent activities connected with digital asset transactions.
Restitution and Regulatory Response
As part of a consent order resolving the matter, Coinme agreed to pay $51,700 in restitution to an elderly California resident who reported being scammed. The remaining portion of the penalty addresses other regulatory concerns and operational shortcomings.
KC Mohseni, a commissioner at the DFPI, emphasized the importance of the enforcement action. "This action should send a strong message to crypto kiosk operators that California means business when it requires digital asset companies to follow the rules that help prevent scammers from taking advantage of unsuspecting Californians," Mohseni said.
Coinme’s Commitment to Compliance and Consumer Protection
Neil Bergquist, CEO and co-founder of Coinme, commented on the settlement, confirming the company’s commitment to expanding its presence in California while prioritizing consumer protections. He stated:
“Coinme shares in the California DFPI’s desire to protect consumers and has deployed extensive consumer warnings to educate consumers as the adoption of digital currencies continues to grow. Coinme had measures to comply with California’s kiosk transaction limit when the law first took effect and has consistently strengthened its controls over time.”
Rising Crypto ATM Scams Drive Regulatory Actions
The DFPI highlighted the increase in scams involving crypto ATMs, where fraudsters trick victims into purchasing cryptocurrencies at kiosks and then transferring funds directly to criminal wallets. In response, California enacted the Digital Financial Assets Law in 2023 to impose stricter regulations on crypto ATM operators.
Nationwide and globally, crypto ATM-related scams have surged. The FBI reported nearly 11,000 complaints in 2024, representing a 31% rise from the previous year, with losses exceeding $246 million. Notably, around two-thirds of victims were aged 60 or older, underscoring the vulnerability of seniors to such scams.
Expanding Crackdowns Beyond California
Other regions have taken more drastic measures against crypto kiosks. For example, Spokane, Washington, recently implemented a ban on crypto ATMs altogether, citing concerns about scams and money laundering. Local authorities noted that funds routed through these kiosks often ended up in countries with strict financial secrecy laws, such as China, North Korea, and Russia.
Internationally, Australian federal police have initiated a crackdown on criminal activities involving crypto ATMs, reaching out to over 90 people, including both alleged offenders and victims of fraud schemes like "pig butchering." In Texas, a county sheriff went so far as to disable a local crypto ATM after a family was reportedly defrauded of $25,000 through the machine.
Coinme’s $300,000 fine and restitution payment represent a significant precedent in California’s approach to regulating the burgeoning crypto ATM market. The case underscores regulators’ growing vigilance and the increasing need for crypto service providers to maintain stringent compliance measures to protect consumers from fraud.
This article includes comments from Coinme CEO Neil Bergquist and has been updated accordingly.