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California’s Department of Financial Protection and Innovation (DFPI) has fined Bitcoin ATM operator Coinhub $675,000 for violating state digital asset regulations — a move that underscores the regulator’s growing scrutiny of crypto ATM businesses.
The penalty includes $105,000 in restitution to California consumers who were overcharged during cryptocurrency transactions. The enforcement marks the DFPI’s fourth action in recent months targeting crypto ATM operators that allegedly mislead or overcharge users.
DFPI Cracks Down on Non-Compliant Crypto ATM Operators
According to DFPI Commissioner KC Mohseni, the agency intends to hold crypto businesses accountable for unfair practices.
“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,” Mohseni said. “We welcome legitimate operators in this industry; however, DFPI will not tolerate those who flout the law and fail to implement required safeguards.”
An investigation revealed that LSGT Services, LLC, operating as Coinhub, violated several aspects of the Digital Financial Assets Law (DFAL) since 2024. The company allegedly charged markup fees above legal limits, processed cash transactions over the $1,000 daily cap, and failed to include mandatory information on receipts and disclosures.
Fourth Enforcement Action Highlights Regulator’s Intent
The DFPI has intensified its oversight of crypto ATM operators amid rising reports of consumer exploitation and fraud.
In June 2025, the agency fined Coinme—another Bitcoin ATM operator—$300,000, with $51,700 allocated for customer restitution. The actions form part of California’s broader push to ensure compliance within the fast-evolving crypto sector.
The DFPI’s enforcement activity signals a clear warning to companies that fail to meet consumer protection and anti-fraud obligations. The agency aims to prevent unlicensed or non-compliant firms from taking advantage of crypto’s increasing retail adoption.
Nationwide Scrutiny of Crypto ATMs
Regulatory pressure on crypto ATMs isn’t limited to California. Other jurisdictions have also taken similar steps to mitigate financial crime and fraud.
In Spokane, Washington, city officials voted unanimously to ban Bitcoin ATMs earlier this year, citing the devices’ link to scams and illicit transactions. Similarly, New Zealand banned crypto ATMs in July 2025 over growing financial crime concerns.
Meanwhile, law enforcement agencies continue to warn consumers about scams involving Bitcoin ATMs. In Massachusetts, police recently reported two residents collectively losing nearly $7,000 in a fraudulent “missed jury duty” scheme, where scammers demanded Bitcoin payments via ATMs.
The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) and the FBI have also raised red flags. FinCEN issued an urgent advisory in August highlighting the role of Bitcoin ATMs in facilitating scams—particularly those targeting elderly Americans. FBI data indicates that U.S. citizens over 60 lost nearly $3 billion to crypto-related fraud in 2024 alone.
The Bigger Picture
California’s latest fine against Coinhub reinforces regulators’ growing concern over unregulated crypto services that expose consumers to financial risks. While Bitcoin ATMs were once seen as a bridge to wider adoption, the increasing number of fraud cases and compliance breaches is prompting governments to tighten oversight.
As state and federal agencies step up enforcement, crypto ATM operators may face stricter rules around KYC (Know Your Customer), AML (Anti-Money Laundering) compliance, and consumer transparency. For legitimate operators, adapting to these regulations could be essential to maintaining access to one of crypto’s most visible retail channels.
