Seattle-based cryptocurrency ATM operator Coinme has been fined $300,000 by the California Department of Financial Protection and Innovation (DFPI) for violating state regulations on crypto ATM usage.
The penalty stems from the company’s failure to comply with California’s daily transaction cap, which limits cryptocurrency ATM transactions to $1,000 per customer per day.
The legal cap, introduced under the state’s Digital Financial Assets Law enacted in 2023, was put in place to curb the growing trend of crypto-related scams and protect vulnerable users.
Coinme’s non-compliance marks a significant breach of these consumer protection measures.
Additional Violations Include Missing Disclosures on Receipts
Beyond exceeding the legal transaction limit, Coinme was also found to be in violation of disclosure requirements.
The DFPI reported that Coinme failed to include critical regulatory information on customer receipts at its crypto kiosks, which are located throughout grocery and convenience stores in California.
These disclosures are legally mandated to ensure transparency and inform customers of their rights and risks during transactions.
The company’s failure to provide this information further compounded its non-compliance and reinforced regulators’ concerns about inadequate consumer safeguards in the cryptocurrency ATM sector.
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Restitution Ordered for Elderly Victim as Part of Settlement
As part of the consent order, Coinme will pay $51,700 in restitution to an elderly California resident who was allegedly defrauded through a transaction involving one of the company’s ATMs.
The victim compensation underscores the DFPI’s growing emphasis on protecting senior citizens, who are increasingly targeted in cryptocurrency scams.
Older individuals often have limited knowledge of digital assets and may be more susceptible to manipulation at unattended kiosks.
By ordering direct restitution, the DFPI aims to hold operators accountable and deter future negligence in consumer protection.
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DFPI Sends a Warning to Crypto Kiosk Operators
K.C. Mohseni, Commissioner of the DFPI, stated that this enforcement action is meant to send a “strong message” to cryptocurrency kiosk operators.
Mohseni emphasized that California is taking a firm stance on requiring digital asset companies to comply with regulations designed to curb scams and fraud.
The case marks the DFPI’s first enforcement action under the state’s Digital Financial Assets Law, indicating a new phase of stricter oversight in the crypto space.
The regulator’s approach suggests that similar violations by other operators will likely face serious penalties moving forward.
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Crypto ATM Scams on the Rise as Lawmakers Crack Down
The fine against Coinme highlights broader concerns around the rising prevalence of crypto ATM scams.
According to the DFPI, scammers often instruct victims, particularly elderly individuals, to buy cryptocurrency at ATMs and transfer funds directly to fraudulent wallets.
These types of scams have become increasingly common, prompting states like California to enact legislation targeting kiosk-based digital asset transactions.
A related report from South Carolina revealed $3.1 million in crypto-related losses in Beaufort County alone, with many incidents involving Bitcoin ATMs.
As consumer losses mount, regulators across the U.S. are moving swiftly to impose safeguards and enforce accountability among crypto service providers.
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