California Fines Coinhub $675,000 for Violating Crypto ATM Rules

• California fines Coinhub $675K for overcharging users and breaching crypto transaction limits.
• DFPI intensifies enforcement under new Digital Financial Assets Law targeting Bitcoin ATM firms.
• Global regulators tighten crypto ATM oversight amid rising scams and consumer fraud cases.

The California Department of Financial Protection and Innovation (DFPI) has imposed a $675,000 penalty on Bitcoin ATM operator Coinhub for multiple violations of the state’s Digital Financial Assets Law (DFAL). The fine includes $105,000 in restitution to California customers who were charged fees above the legally permitted maximum.

According to DFPI’s findings, Coinhub, operated by LSGT Services, LLC, has been overcharging users since 2024 and accepting cash transactions that exceeded the state’s $1,000 daily limit. The company was also cited for failing to include required transaction disclosures and omitting essential information from receipts. The regulator stated that these violations undermined consumer protections under California’s newly enforced crypto laws.

Part of Wider Enforcement Push

The Coinhub penalty marks the DFPI’s fourth enforcement action in recent months targeting cryptocurrency ATM operators. The agency has intensified its oversight following the implementation of the DFAL, which sets standards for transparency, fee limits, and anti-fraud protections in digital financial services.

In June, the DFPI fined another Bitcoin ATM provider, Coinme, $300,000 for similar violations, with $51,700 allocated as restitution to affected California residents. Regulators have signaled that these measures are part of an ongoing effort to ensure compliance across the growing crypto ATM industry.

Crackdowns Beyond California

The regulatory scrutiny extends beyond California. In July, New Zealand authorities proposed banning cryptocurrency ATMs entirely, citing growing concerns over financial crimes associated with their use. Similarly, the Spokane City Council in Washington voted unanimously to prohibit such kiosks after noting their role in facilitating scams and illegal transactions.

The Coinhub action follows a surge in reports of Bitcoin ATM–related fraud across the United States. Earlier this week, Massachusetts police reported that two residents collectively lost nearly $7,000 in scams involving fake jury duty calls instructing victims to send money via Bitcoin ATMs. The Norfolk County Sheriff’s Office has since warned citizens not to comply with such demands, emphasizing that law enforcement agencies never request payment through cryptocurrency machines.

Federal authorities have also issued alerts. In August, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) released an advisory highlighting the increased use of Bitcoin ATMs in scams targeting older Americans. An FBI report later revealed that seniors lost nearly $3 billion to crypto-related fraud in 2024, despite representing only about 17% of the U.S. population.