Coinme, a prominent crypto ATM operator, has been hit with a $300,000 fine by California regulators for breaching daily transaction limits and failing to provide mandatory disclosures on customer receipts. This marks the state's inaugural enforcement action under its new Digital Financial Assets Law, underscoring a growing crackdown on crypto ATM operations amidst rising scam concerns.
California Cracks Down on Crypto ATM Violations
California's Department of Financial Protection and Innovation (DFPI) announced a significant enforcement action against Coinme, a Seattle-based crypto ATM operator. The company was fined $300,000 for two primary violations:
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Exceeding the state's $1,000 per customer per day transaction limit for crypto ATMs.
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Failing to include required disclosures on customer receipts at its kiosks located in grocery and convenience stores across California.
This action represents the DFPI's first enforcement under the Digital Financial Assets Law, enacted in 2023 to regulate digital asset companies and protect consumers.
Restitution and Regulatory Message
As part of a consent order, Coinme has agreed to pay the $300,000 penalty, which includes $51,700 in restitution to an elderly California resident who was scammed. KC Mohseni, a DFPI commissioner, emphasized that this enforcement should "send a strong message" to crypto kiosk operators, indicating the state's commitment to ensuring compliance and preventing scams.
The Rise of Crypto ATM Scams
The DFPI highlighted the increasing prevalence of crypto ATM scams, where fraudsters trick victims into purchasing crypto at ATMs and transferring funds directly to their wallets. The Digital Financial Assets Law was specifically designed to address these risks through stricter kiosk operator regulations.
Recent data underscores the severity of the issue:
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The FBI reported nearly 11,000 complaints and over $246 million in losses associated with crypto ATM scams in 2024, a 31% increase from 2023.
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Two-thirds of these scam victims were over 60 years old.
Broader Regulatory Landscape
California's action against Coinme is part of a broader trend of increased scrutiny on crypto ATMs globally:
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Spokane, Washington: The city recently banned crypto ATMs, citing concerns about scams and money laundering, with local police noting funds often end up in illicit destinations.
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Australia: Federal police have initiated a crackdown on the criminal use of crypto ATMs, contacting over 90 citizens involved in various schemes.
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Texas: A county sheriff reportedly used a power-cutting tool to disable a local crypto kiosk after a family was scammed out of $25,000.
These incidents highlight the growing efforts by authorities to regulate and curb the misuse of crypto ATMs to protect consumers from financial fraud.
Sources
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Coinme Pays $300K In California's First Crypto Kiosk Fine, Cointelegraph.
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