Coinme Fined for Regulatory Violations
Coinme, a cryptocurrency ATM service based in Seattle, has been fined $300,000 for not adhering to daily transaction limits imposed by California. As stipulated in regulations introduced last year, customers are restricted to a maximum of $1,000 in transactions per day at these kiosks. Furthermore, the company neglected to provide essential disclosures on receipts issued by its ATMs, located within various grocery and convenience stores throughout California, as outlined by the state’s Department of Financial Protection and Innovation (DFPI).
Enforcement Action and Consumer Protection
This fine represents the first significant enforcement action taken under California’s Digital Financial Assets Law, aimed at safeguarding consumers from the burgeoning risks associated with cryptocurrency transactions. As part of the consent decree, Coinme is not only liable for the fine but is also required to pay $51,700 in restitution to a senior citizen from California who reported being defrauded.
KC Mohseni, a commissioner of the DFPI, emphasized that this action serves as a robust warning to other operators of crypto kiosks of the state’s commitment to enforcing regulations designed to protect California’s residents from scams.
Rising Incidents of Crypto ATM Scams
In recent years, scams involving cryptocurrency ATMs have surged, with the DFPI noting that fraudsters mislead victims into purchasing cryptocurrency and transferring large sums directly to their wallets. In 2024 alone, the FBI documented nearly 11,000 complaints, resulting in over $246 million in losses attributed to crypto ATM scams, which marked a 31% increase compared to the previous year. Alarmingly, two-thirds of those affected by these scams were individuals aged 60 or older.
Local and International Responses
In a related incident, Spokane, Washington’s second-largest city, recently enacted a ban on cryptocurrency ATMs to shield residents from similar fraudulent schemes and money laundering, with local authorities alleging connections between these operations and international crime syndicates.
Meanwhile, Australian federal police are conducting outreach to over 90 citizens as part of their efforts to tackle criminal exploitation involving crypto ATMs, including victims of a scam technique known as “pig butchering”. In Texas, a local sheriff made headlines for severing power to a crypto ATM after a family fell victim to a $25,000 scam.
Conclusion
Overall, the situation highlights the increasing scrutiny and regulation surrounding the crypto ATM industry, as authorities strive to protect consumers from fraud and abuse in a rapidly evolving digital landscape.
