Coinme Fined $300,000 for Violating California’s Crypto Laws

Coinme, a crypto ATM operator, will pay $300,000 for violations of California’s Digital Financial Law, including $51,700 for victim restitution. The investigation revealed the company failed to comply with regulations limiting daily transactions to $1,000 and did not provide necessary disclosures on customer receipts. This enforcement represents the state’s first action under the recently enacted DFAL, aimed at protecting consumers from potential scams.

In a recent announcement, California authorities disclosed that crypto ATM operator Coinme will pay a hefty fine of $300,000 after breaching state laws governing digital financial transactions. This penalty includes a restitution sum of $51,700 directed towards victims of the firm’s violations of the Digital Financial Law, a regulation designed to safeguard consumers in the cryptocurrency realm.

Based out of Seattle, Coinme operates various crypto kiosks, often found in convenient locations like grocery outlets across California. Customers visiting these ATMs can convert cash or other payments into digital currencies, making transactions relatively easy. However, the California Department of Financial Protection and Innovation (DFPI) discovered during their investigation that Coinme didn’t adhere to critical guidelines established by the Digital Financial Assets Law (DFAL).

Specifically, the DFAL imposes a restriction on the amount of money a kiosk can accept or dispense in a single day, setting this limit at $1,000. Furthermore, Coinme reportedly neglected to provide mandatory disclosures on customer receipts, which is another requirement under the law. Consequently, the DFPI executed a consent order with Coinme, legally binding the company to address these violations and enforce payment of the financial penalty, including reparations to affected users.

This represents the initial enforcement effort regarding the DFAL, a law introduced in 2023 aimed at reducing the risks associated with operations of digital financial asset vendors like kiosks. Protecting consumers from potential scams is a significant aspect of this legislation, particularly since scammers often exploit such kiosks to fraudulently transfer digital assets to their own accounts following exchanges.

DPFI Commissioner KC Mohseni expressed that this enforcement action should convey a clear warning to kiosk operators regarding the serious nature of regulatory compliance in California’s digital assets market. The goal is to make it unmistakably clear that the state demands adherence to the established guidelines. For individuals interested in learning more about crypto scams or wanting to report fraudulent activities, relevant resources are available on the DFPI’s official website, which explains the protections in place for California consumers.