Market News

California Law Targets Bitcoin ATMs: Regulator Fines Coinhub $675K Amid Consumer Protection Push

The California Department of Financial Protection and Innovation (DFPI) has imposed a significant fine of $675,000 on Bitcoin ATM operator Coinhub for violations related to consumer pricing.

This penalty includes $105,000 designated as restitution for customers who were overcharged beyond the legally allowed maximum fees.

DFPI Commissioner KC Mohseni emphasized the agency's commitment to combating bad actors in the crypto space, stating they are determined to protect consumers' interests.

The investigation revealed that Coinhub, operating as LSGT Services, LLC, charged excessive markup fees and accepted cash transactions exceeding the $1,000 daily limit.

Additionally, Coinhub failed to provide essential information on receipts and neglected to issue mandatory disclaimers before transactions.

This enforcement action is part of a broader initiative by DFPI, which has recently intensified scrutiny on crypto ATM operators to ensure compliance with California’s Digital Financial Assets Law.

Earlier this year, Coinme was fined $300,000 for similar violations focused on consumer protection.

Elsewhere, other jurisdictions have also started to crack down on Bitcoin ATMs, with Spokane, Washington, recently banning them due to rising scams and financial crime.

In New Zealand, a ban was implemented in July, while authorities in Massachusetts alerted residents to scams involving Bitcoin ATMs connected to jury duty payments.

With the FBI reporting significant losses to crypto fraud, particularly among older Americans, regulatory actions like these underscore the urgent need for consumer protections in the cryptocurrency landscape.