Coinme Fined $300,000 for Violating California Crypto Laws

Seattle-based cryptocurrency ATM operator Coinme has agreed to pay a $300,000 penalty to California regulators for violating state laws governing digital financial assets. The California Department of Financial Protection and Innovation (DFPI) found that Coinme allowed customers to exceed the state’s $1,000 per-day transaction limit and failed to provide mandatory disclosures on receipts. This is the first enforcement action under the state’s 2023 Digital Financial Assets Law, which aims to address consumer protection concerns related to crypto kiosks. As part of the settlement, Coinme will also pay $51,700 in restitution to an elderly customer who was scammed.

DFPI Commissioner KC Mohseni emphasized that the penalty serves as a warning to other digital asset operators about the state's commitment to enforcing compliance to protect consumers. The rise in crypto ATM-related scams has become a growing concern for regulators, as criminals often trick victims into purchasing digital assets at kiosks and sending them directly to fraudsters' wallets. The FBI reported close to 11,000 complaints related to these kinds of scams in 2024 alone, totaling over $246 million in losses. This was a 31% increase from the previous year, and seniors over 60 made up the majority of victims.

Similar concerns are emerging globally. In Australia, federal police recently reached out to over 90 people as part of a crackdown on the misuse of crypto ATMs, including those affected by “pig butchering” scams. In Texas, a sheriff physically dismantled a crypto ATM after a local family reportedly lost $25,000 in a scam. In Spokane, Washington, the city became the first in the state to ban crypto ATMs entirely due to rising fraud, particularly in low-income areas. The ordinance, proposed by Council member Paul Dillon, aims to protect vulnerable people from fraud involving virtual currency kiosks. The new measure prohibits the installation of future crypto ATMs and mandates the removal of existing machines, many of which are located in low-income neighborhoods and high-traffic locations like grocery and convenience stores.

The ordinance referred to a concerning increase in scam activity linked to these kiosks, and pointed out that victims often lose thousands of dollars. Within 60 days, crypto ATM operators are required to remove their machines or face civil penalties and potential revocation of business licenses. The City Council also plans to monitor and report on the effectiveness of the ban by tracking changes in reported crimes involving crypto kiosks. Local law enforcement supported the move, with a police detective sharing cases where funds deposited into these ATMs ended up in foreign jurisdictions. Scammers often impersonate law enforcement or tax officials to coerce victims into converting their money into crypto to avoid fictitious legal consequences. Once the money is transferred into cryptocurrency, it becomes nearly impossible to recover.