California’s Department of Financial Protection and Innovation (DFPI) has imposed a substantial fine of $675,000 on Bitcoin ATM operator Coinhub for breaching laws related to digital assets. A significant portion of this penalty—$105,000—will be allocated as restitution to affected consumers who were subjected to excessive charges by the ATM operator.
This action represents the fourth enforcement measure taken by the DFPI as part of a broader initiative to address what it describes as exploitative practices by crypto ATM operators. DFPI Commissioner KC Mohseni emphasized the agency’s commitment to eliminating harmful practices, stating, “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.” He further underscored the DFPI’s openness to legitimate operators in the cryptocurrency sector, while reaffirming zero tolerance for those who disregard legal standards and necessary consumer protections.
The DFPI’s investigation revealed that since 2024, LSGT Services, LLC—operating under the name Coinhub—engaged in several illegal practices. These included imposing markup fees that exceeded the legally permitted limits, processing cash transactions that surpassed the daily cap of $1,000, failing to disclose important information on transaction receipts, and neglecting to provide mandatory disclaimers before finalizing transactions.
This regulatory action follows earlier measures taken by the DFPI, including a noteworthy fine of $300,000 against another Bitcoin ATM operator, Coinme, in June. Similar to Coinhub’s situation, a portion of this fine—$51,700—was designated for the restitution of California consumers.
The regulatory crackdowns are not isolated to California. Across the United States, other jurisdictions are also stepping up measures against crypto ATM operators amid rising concerns about scams and financial crimes. For instance, the Spokane City Council in Washington has unanimously decided to ban crypto kiosks, primarily due to an uptick in fraud. Furthermore, New Zealand implemented a ban on crypto ATMs in July in response to growing financial crime issues.
Recently, the Massachusetts police issued warnings regarding Bitcoin ATM scams after two residents fell victim to a scheme that claimed payments were overdue for jury duty, resulting in losses totaling nearly $7,000. Additionally, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has raised alarms about the role of Bitcoin ATMs in various scams, particularly highlighting their impact on older Americans. A report from the FBI revealed that senior citizens lost nearly $3 billion to cryptocurrency fraud in 2024, despite representing only about 17% of the U.S. population.
As the DFPI continues to pursue accountability within the cryptocurrency landscape, it remains to be seen how crypto operators will adjust to the mounting regulatory pressures. Meanwhile, representatives from both the DFPI and Coinhub have yet to respond to inquiries regarding this enforcement action.
