Finance

California’s Crackdown: Why Bitcoin ATM Operator Coinhub Faces $675K Fine and What it Means for Crypto Users

Coinhub was fined $675,000 by CA for DFAL violations, with $105,000 for restitution.

byAndres Castro

October 31, 2025, 4:27 PM

A hand inserts a coin into a slot machine.

A hopeful hand drops a coin into the illuminated slot machine, anticipating a winning combination. By MDL.

Executive Summary

The California Department of Financial Protection and Innovation (DFPI) fined Bitcoin ATM operator Coinhub $675,000 for multiple violations of the state’s Digital Financial Assets Law (DFAL), including $105,000 for consumer restitution.

Coinhub’s violations included charging excessive markup fees, accepting cash transactions above the $1,000 daily limit, and failing to provide legally mandated information and disclaimers.

This action is part of a broader regulatory crackdown by the DFPI and other jurisdictions on crypto ATM operators due to rising concerns over scams, illicit financial activities, and the need for greater consumer protection.

The Story So Far

The California Department of Financial Protection and Innovation (DFPI) is actively enforcing its Digital Financial Assets Law (DFAL) against crypto ATM operators, following a broader trend of increased regulatory scrutiny in other jurisdictions. This heightened enforcement is primarily driven by a significant rise in crypto ATM-related scams, especially those targeting elderly Americans, which has led to substantial financial losses and underscores the need for robust consumer protection measures.

Why This Matters

The California DFPI’s substantial fine against Coinhub signals a rigorous regulatory crackdown on crypto ATM operators, emphasizing a strong intent to enforce consumer protection laws and combat illicit activities within the digital asset space. This action, alongside similar efforts in other jurisdictions, reflects a growing global concern over crypto ATM-related scams and financial crimes, particularly those targeting vulnerable populations, and suggests that operators can expect heightened scrutiny and stricter compliance demands moving forward.

Who Thinks What?

The California Department of Financial Protection and Innovation (DFPI) and other regulatory bodies, including FinCEN and local police, are actively enforcing consumer protection laws, issuing fines, and warning the public about scams related to Bitcoin ATMs, aiming to “root out bad actors and scammers.”

Bitcoin ATM operators, such as Coinhub, have been found to violate state laws by overcharging consumers, exceeding transaction limits, and failing to provide required disclosures, leading to significant fines and restitution orders.

The California Department of Financial Protection and Innovation (DFPI) has levied a $675,000 fine against Bitcoin ATM operator Coinhub, doing business as LSGT Services, LLC, for multiple violations of the state’s Digital Financial Assets Law (DFAL). The penalty includes $105,000 designated for restitution to California consumers who were overcharged by the company.

DFPI Commissioner KC Mohseni stated that the action serves as a warning to crypto kiosk operators in California, emphasizing the regulator’s intent to “root out bad actors and scammers.” The DFPI welcomes legitimate industry participants but will not tolerate those who disregard the law and fail to implement necessary consumer safeguards.

Regulatory Findings

An investigation by the DFPI revealed that Coinhub had, since 2024, charged markup fees exceeding the allowed maximums. The operator also accepted cash transactions above the $1,000 daily limit, omitted crucial information from receipts, and failed to provide legally mandated disclaimers before transactions were completed.

Broader Crackdown on Crypto ATMs

This enforcement action marks the fourth in recent months by the DFPI against crypto ATM operators, underscoring a concerted effort to enforce California’s Digital Financial Assets Law. In June, the DFPI issued its first DFAL violation fine against Bitcoin ATM operator Coinme for $300,000, with $51,700 allocated for customer restitution.

Other jurisdictions are also increasing scrutiny on crypto ATMs. Spokane, Washington, banned the kiosks due to a rise in scams and financial crimes, while New Zealand implemented a similar ban in July, citing growing concerns over illicit financial activities.

Warnings Against Scams

The regulatory actions come amid escalating warnings about Bitcoin ATM-related scams. Earlier this week, police in Massachusetts cautioned residents after two individuals lost nearly $7,000 to a scam involving fictitious calls for missed jury duty payments through Bitcoin ATMs.

In August, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued an urgent warning regarding the use of Bitcoin ATMs in scams, particularly those targeting elderly Americans. An FBI report indicates that this demographic lost nearly $3 billion to crypto fraud in 2024, despite comprising a smaller percentage of the population.

The recent enforcement actions by the DFPI and other jurisdictions highlight a growing regulatory focus on consumer protection within the cryptocurrency ATM sector, aiming to curb illicit activities and ensure compliance with financial laws.