In brief
- California’s Department of Financial Protection and Innovation (DFPI) fined Coinhub $675,000 for violating digital assets law.
- Of that total, $105,000 is due as restitution to consumers who were overcharged by the ATM operator.
- This marks the fourth enforcement action from 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 that were charged more than the allowed maximum fee and charges for crypto ATM use.
“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,” said DFPI Commissioner KC Mohseni, in a statement. “We welcome legitimate operators in this industry, however, DFPI will not tolerate those who flout the law and fail to implement required safeguards for customers.”
As part of its investigation, DFPI found that since 2024, LSGT Services, LLC—which does business as Coinhub—charged markup fees above the maximum, accepted cash transactions above the daily $1,000 limit, omitted key information on receipts, and failed to provide legally required disclaimers before transactions.
The regulator’s recent enforcement action is its fourth in recent months against crypto ATM operators as it works to serve warning to those violating California’s Digital Financial Assets Law (DFAL).
In June, the DFPI took its first enforcement action due to violations of the DFAL, fining Bitcoin ATM operator Coinme $300,000 for violations—$51,700 of which was earmarked as restitution to California customers.
Other jurisdictions have been cracking down on crypto ATM operators as well. The city council in Spokane, Washington unanimously voted to ban the kiosks due to the increase in scams and financial crime.
New Zealand also banned crypto ATMs in July, citing rising financial crime concerns. Earlier this week, police in Massachusetts warned its citizens after two residents lost nearly $7,000 in total to Bitcoin ATM scams that used a new scheme which claimed that payments were due for missing jury duty.
In August, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued an urgent warning on the use of Bitcoin ATMs in scams and their particular effect on elderly Americans. An FBI report shows that the demographic lost nearly $3 billion to crypto fraud in 2024, despite only accounting for around 17% of the population.
Representatives for DFPI and Coinhub did not immediately respond to Decrypt’s request for comment.
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