Coinme Fined $300,000 for Violating California Crypto ATM Laws

Coinme, a Seattle-based cryptocurrency ATM operator, has agreed to pay a $300,000 penalty for violating California's crypto ATM laws. The company exceeded the daily transaction limit of $1,000 per customer per day, as mandated by a law enacted last year. Additionally, Coinme failed to include required disclosures on customer receipts at its kiosks located in grocery and convenience stores across California, according to the state’s Department of Financial Protection and Innovation.

This enforcement action marks the first under California’s Digital Financial Assets Law, which was implemented to address risks associated with crypto ATM scams. The law aims to protect consumers by regulating kiosk operators and ensuring they comply with necessary disclosures and transaction limits. The consent order requires Coinme to pay the penalty, including $51,700 in restitution to an elderly California resident who claimed to have been scammed.

KC Mohseni, a commissioner of the Department of Financial Protection and Innovation, emphasized that this action sends a strong message to crypto kiosk operators that the state is serious about enforcing rules designed to prevent scammers from exploiting unsuspecting consumers. The enforcement highlights the growing concern over crypto ATM scams, where victims are tricked into purchasing crypto assets and transferring funds directly to fraudsters’ wallets. The Digital Financial Assets Law was enacted to mitigate these risks through stricter regulations on kiosk operators.

In April, the FBI reported a significant increase in crypto ATM scams, with almost 11,000 complaints and over $246 million in losses in 2024, a 31% increase from the previous year. Two-thirds of the victims were over 60 years old, underscoring the vulnerability of the elderly to such scams. This trend has led to increased scrutiny and regulatory actions, including the ban on crypto ATMs in Spokane, Washington, to protect citizens from scams and money laundering. Local police in Spokane claimed that funds deposited into crypto kiosks often ended up in high-risk regions.

The regulatory action against Coinme is part of a broader effort to enhance consumer protection and ensure compliance within the cryptocurrency industry. As digital currencies gain mainstream acceptance, regulatory bodies are becoming more vigilant in enforcing laws and regulations. The $300,000 fine imposed on Coinme serves as a clear indication that regulatory authorities are taking a tough stance on non-compliance, and companies that fail to meet the required standards will face significant penalties. This incident highlights the importance of robust compliance programs and a proactive approach to regulatory requirements for companies operating in the cryptocurrency sector.