In brief
- Washington regulators allege that Bitcoin ATM operator Coinme claimed more than $8 million in unredeemed vouchers as income, violating state money-transmission laws.
- The company faces license revocation, a $300,000 fine, a $375 investigation fee, and a potential 10-year industry ban for both Coinme and its CEO.
- Coinme has 20 days to request a hearing, or the temporary cease-and-desist order automatically becomes permanent, according to DFI.
Washington state regulators have ordered Bitcoin ATM operator Coinme to halt business and move to repay more than $8 million in unclaimed customer funds, accusing the kiosk firm of treating unredeemed vouchers as income and flouting money-transmission rules.
In a temporary cease-and-desist order and Statement of Charges dated last Tuesday, the Washington State Department of Financial Institutions (DFI) alleged Coinme’s voucher system for buying crypto violated the state’s Uniform Money Services Act.
Between January 2023 and December 2024, Coinme reportedly claimed $8.37 million in unredeemed customer vouchers as company income, $2.2 million from Washington customers at year-end 2023, and $6.17 million from Washington and non-Washington customers at year-end 2024, according to the filings.
The Seattle-based firm sold crypto through paper vouchers that users purchased at kiosks and later redeemed online, but when many users failed to redeem them in time, the company allegedly treated those still-owed customer funds as Coinme’s own income and did not disclose that practice or turn abandoned property over to the state, the DFI said in a Monday statement.
The platform has 20 days from the date the order is served to request an adjudicative hearing; if it does not, the temporary cease-and-desist becomes permanent on the 21st day, according to DFI.
From 2020 through 2025, Coinme “did not always maintain a tangible net worth in the amount required by the Director,” kept inconsistent permissible-investment records, and filed “inaccurate reports” and late annual filings with DFI, the regulator noted.
Under the order, Coinme must immediately stop serving Washington customers except to return funds, segregate all state customer assets into individual accounts, and pay restitution equal to the greater of what each user paid or the crypto’s value on the date of the order.
The statement of charges revealed the Department’s intent to revoke Coinme’s money transmitter license and impose a $300,000 fine plus a $375 investigation fee on the company.
The charges also target Neil Bergquist, co-founder and CEO of Coinme, seeking to prohibit both him and the company from participation in any money transmitter business for ten years.
In a statement shared with Decrypt, Coinme’s Chief Compliance and Consumer Protection Officer Ben Enea stated that the firm was unaware of the DFI’s concerns until today’s announcement, and had not been contacted in the course of its investigation.
Enea added that the product in question has been discontinued for over two years, that the “vast majority of customers” had redeemed their vouchers, and that “Every voucher purchased can still be redeemed at coinme.com or in the Coinme mobile app, with no expiration date,” either for U.S. dollars or cryptocurrency.”
Crypto kiosk scrutiny
Daniel Liu, CEO of Republic Technologies, told Decrypt the situation appears to stem from “operational mismanagement rather than loss or theft of customer funds,” noting that if Coinme’s treatment of unredeemed vouchers mirrors how retailers handle unused gift cards, “then the underlying practice itself is not inherently unreasonable, but the execution clearly fell short.”
“The phase-out of the product introduced preventable issues, including what seems to have been a dysfunctional customer-support pipeline,” Liu said. “Those are responsibilities the company has to own.”
Coinme’s Enea also likened the product to “standard industry accounting for unredeemed prepaid items like gift cards,” and stated that it had followed “professional guidance” to account for the transactions, which had been reviewed on multiple occasions by its auditors.
Last month, California’s Department of Financial Protection and Innovation fined Bitcoin ATM operator Coinhub $675,000 for overcharging customers, with $105,000 earmarked as restitution for consumers charged above the maximum allowed fees.
The same California regulator previously fined Coinme $300,000 in June for charging excessive markup fees, accepting cash transactions above the $1,000 daily limit, and omitting key information on receipts, with $51,700 designated as customer restitution.
This article has been updated with additional comment from Coinme.
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Source: https://decrypt.co/350905/coinme-ordered-to-return-over-8m-to-customers-in-washington-state-crackdown
