Coinme Fined $300,000 for Breaching California’s Digital Financial Law
Coinme, a crypto kiosk operator, has been subjected to a $300,000 fine, which includes $51,700 allocated for restitution to affected individuals, due to violations of California’s Digital Financial Law. The California Department of Financial Protection and Innovation made this announcement on Wednesday.
The Seattle-based firm operates crypto kiosks, often referred to as crypto ATMs, in various locations throughout California, including grocery and convenience stores. These kiosks allow users to convert cash or other payment methods into digital currencies.
During an investigation by the Department of Financial Protection and Innovation (DFPI), it was determined that Coinme was not adhering to the Digital Financial Assets Law (DFAL), which imposes a daily limit of $1,000 on transactions conducted at these kiosks. Additionally, Coinme neglected to provide the necessary disclosures on customer receipts.
As a result of these findings, the DFPI has entered into a consent order with Coinme, mandating the company to pay the imposed penalty, which includes restitution for an elderly resident in California. This marks the first enforcement action under the DFAL, a regulation introduced in 2023 aimed at reducing the risks associated with digital financial asset businesses, such as kiosks.
The DFAL was specifically put in place to safeguard individuals from crypto scams, which are prevalent as fraudsters often utilize these kiosks to deceive users by diverting digital assets to their own wallets post-exchange.
“This enforcement action should send a strong message to kiosk operators that California is serious about requiring compliance from digital asset companies,” stated DPFI Commissioner KC Mohseni.
