In an ongoing effort to protect consumers, the California Department of Financial Protection and Innovation (DFPI) has taken action against multiple crypto kiosk operators, including Nevada-based LSGT Services, LLC, which does business as “Coinhub.”

Coinhub must pay $675,000, which includes $105,000 in restitution to California consumers it overcharged.

The DFPI investigation found that, since January 2024, Coinhub has committed violations, including:

Charging California consumers fees and markups well above the statutory maximums.
Accepting cash transactions exceeding the legal daily limit of $1,000,
Failing to provide legally required disclosures before transactions and omitting key information on receipts, including customer names and exchange sources.

Many of the customers using the Coinhub kiosks were over 60 years old.

This enforcement action, the fourth of its kind by DFPI against a crypto kiosk operator in recent months, serves as a warning to companies that violate California’s Digital Financial Assets Law (DFAL), and helps protect consumers who use these kiosks (often known as crypto ATMs) to exchange cash or other forms of payment for digital financial assets.

“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. “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.”

Many companies legally operate crypto kiosks in California, typically located in grocery and convenience stores. The machines enable to insert cash directly to buy and sell digital financial assets such as Bitcoin. The transactions are often instant and non-refundable.

More Enforcement Actions against Crypto ATM Operators

DFPI continues to take stringent actions against other unscrupulous crypto kiosk operators. The Coinhub action is one of several recent enforcement actions. Since June this year, DFPI has issued desist and refrain orders against the following companies that operate kiosks throughout California for DFAL violations:

Coin Time LLC, based in Wyoming
Anh Management, LLC (Hermes Bitcoin), based in Southern California

The two companies conducted thousands of transactions without collecting sufficient identifying information, in violation of federal anti-money laundering requirements and the DFAL. The orders require the companies to comply with the law, pay restitution to customers, and face administrative penalties.

In June, DFPI fined Coinme, a crypto kiosk operator, $300,000 for DFAL violations, including $51,700 in restitution to California residents. Coinme has agreed to implement measures to prevent future violations.

DFPI has received expanded authority under the 2023 DFAL and the 2020 California Consumer Financial Protection Law (CCFPL). These are among the strongest laws of their kind in the nation.

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) recently issued a notice urging kiosk operators to be vigilant in proactively addressing potential scams and frauds.