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In short
- The California Department of Financial Protection and Innovation (DFPI) has fined Coinhub $675,000 for violating the digital asset law.
- Of that total, $105,000 is owed as restitution to consumers who were overcharged by the ATM operator.
- This marks the fourth enforcement action by the regulator as it cracks down on crypto ATM operators that it says are taking advantage of consumers.
The California Department of Financial Protection and Innovation (DFPI) has fined Bitcoin ATM operator Coinhub $675,000 for overcharging customers, the regulator announced on Friday.
The fine includes $105,000 paid as restitution to California consumers who were charged more than the maximum allowed fee and charges for using crypto ATMs.
“Crypto kiosk operators in California are on notice that we intend to root out bad actors and scammers who put consumers’ hard-earned money at risk,” DFPI Commissioner KC Mohseni said in a statement. “We welcome legitimate operators in this industry, however, DFPI will not tolerate those who flout the law and fail to implement the necessary safeguards for customers.”
As part of its investigation, DFPI found that since 2024, LSGT Services, LLC – which does business as Coinhub – paid marking fees above the maximum, accepted cash transactions above the $1,000 daily limit, omitted key information on receipts, and did not provide legally required disclaimers before transactions.
The regulator’s recent enforcement action is the fourth in recent months against crypto ATM operators as it works to serve up warnings to those who violate California. The law of digital financial assets (DFAL).
In June, the DFPI took its first enforcement action due to violations of the DFALfining Bitcoin ATM operator Coinme $300,000 for violations-$51,700 of which was intended as restitution to California customers.
Other jurisdictions have also cracked down on crypto ATM operators. The city council in Spokane, Washington voted unanimously to ban kiosks because of the increase in scams and financial crimes.
New Zealand also banned crypto ATMs in Julyciting growing financial crime concerns. Earlier this week, the police in Massachusetts warned its citizens after two residents lost almost $7,000 in total to Bitcoin ATM scams that used a new scheme that claimed payments were due for default.
In August, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued an urgent warning about the use of Bitcoin ATMs in scams and their particular effect on elderly Americans. An FBI report shows that the demographic lost almost $3 billion to crypto fraud in 2024, although it only accounts for about 17% of the population.
Representatives for DFPI and Coinhub did not immediately respond Decrypt’s request for comment.
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