What You Need to Know: DFPI Takes Action Against Several Crypto Kiosk Operators Who Overcharged Consumers
The California Department of Financial Protection and Innovation (DFPI) has stepped up its efforts to safeguard consumers by targeting several crypto kiosk operators, including LSGT Services, LLC (Coinhub) based in Nevada. These operators are now required to pay a hefty sum of $675,000 for violating state regulations, which includes providing refunds to customers in California whom they overcharged. This enforcement initiative marks the fourth such action taken by DFPI in recent months against crypto kiosk operators, aiming to uphold California’s Digital Financial Assets Law (DFAL) and protect users who rely on these kiosks—commonly referred to as crypto ATMs—for converting cash or other payment forms into digital assets.
DFPI’s Commitment to Consumer Protection
“Operators of crypto kiosks in California should be aware that we are committed to eliminating fraudulent activities that jeopardize consumers’ finances,” said DFPI Commissioner KC Mohseni. “While we encourage legitimate businesses in this sector, we will not hesitate to take action against those who disregard the law and fail to implement necessary consumer protections.” Many legitimate crypto kiosks operate in California, often found in grocery and convenience stores, allowing users to quickly buy and sell digital currencies like Bitcoin. These transactions are generally instantaneous and non-refundable, but a recent investigation by DFPI uncovered serious violations committed by Coinhub since January 2024.
Violations Found by DFPI Investigations
The investigation revealed that Coinhub had been charging excessive fees beyond the legally permitted limits for California consumers. They also accepted cash transactions that exceeded the legal daily cap of $1,000, and failed to provide essential disclosures prior to transactions. Additionally, key information was missing from receipts, such as customer names and exchange sources, which is crucial for transparency. Notably, many users of Coinhub kiosks were seniors over the age of 60.
Continued Enforcement Actions by DFPI
The recent ruling against Coinhub, which includes $105,000 allocated for consumer restitution, follows a series of enforcement actions by DFPI taken since June of this year. These actions have targeted several companies operating kiosks across California for similar violations of the DFAL. The identified businesses conducted numerous transactions while neglecting to gather adequate identifying information, thereby breaching federal anti-money laundering regulations as well as state law. The enforcement orders mandate compliance with the law and restitution payments to customers who faced unjust fees, alongside potential administrative penalties.
Further Developments in Crypto Regulation
On June 25, 2025, the DFPI also imposed a $300,000 fine on Coinme, another crypto kiosk operator, for DFAL violations, which included $51,700 for restitution to California residents. Coinme has since agreed to implement measures to prevent future infractions. The DFPI is intensifying its crackdown on other unscrupulous crypto kiosk operators to ensure a fair competitive landscape for law-abiding businesses. With the expanded authority granted under the 2023 Digital Financial Assets Law (DFAL) and the 2020 California Consumer Financial Protection Law (CCFPL), California has established some of the most robust consumer protection laws in the nation.
Guidance for Consumers
In light of these developments, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network has issued a reminder for kiosk operators to remain vigilant against potential scams and fraudulent activities. To reduce these risks, consumers are encouraged to educate themselves about crypto kiosk scams. If you believe you have been a victim of fraud or have information regarding scams not yet listed on the Crypto Scam Tracker, report it to the DFPI by submitting a complaint online or by calling their toll-free number.
About DFPI
The Department of Financial Protection and Innovation is dedicated to consumer protection, regulation of financial services, and promoting responsible innovation. DFPI’s mission is to protect consumers by establishing and enforcing financial regulations that ensure transparency and accountability in the marketplace. The department empowers Californians to access a fair and equitable financial environment through educational resources and by preventing potential risks, fraud, and abuse. For more information, visit the DFPI’s official website.
