Polygon Set to Acquire Bitcoin ATM Giant Coinme for $100M-$125M

TLDR

• Polygon is reportedly close to acquiring Coinme, a major U.S. Bitcoin ATM provider, for $100 million to $125 million.
• Coinme operates over 50,000 Bitcoin ATM locations across 49 U.S. states, making it one of the largest networks in the country.
• Polygon is advised by Architect Partners in the acquisition of Coinme, which represents a move into physical cryptocurrency infrastructure.
• Coinme is currently facing regulatory challenges in Washington state, including a potential $300,000 fine and a ten-year industry ban.
• Despite the regulatory issues, Polygon’s acquisition of Coinme is seen as a strategic step to expand beyond its Ethereum scaling technology.

Polygon, a layer-2 Ethereum network, is reportedly close to acquiring U.S. Bitcoin ATM provider Coinme. The deal, which could be worth between $100 million and $125 million, is nearing finalization, according to sources familiar with the matter. Polygon’s acquisition of Coinme marks a move into the physical cryptocurrency infrastructure space, expanding beyond its blockchain scaling technology.

Polygon Negotiates Acquisition of Coinme

Sources indicate that Polygon is “close to” completing the acquisition of Coinme, a well-known Bitcoin ATM provider in the U.S. Polygon, which has been scaling Ethereum, aims to strengthen its consumer-facing presence through this deal. Architect Partners is advising Polygon in this acquisition, assisting with the transaction process.

Coinme is one of the largest Bitcoin ATM networks in the U.S., with more than 50,000 locations across 49 states. The company, which launched its first crypto kiosk in 2014, has built a major presence in the Bitcoin ATM industry. This acquisition would significantly expand Polygon’s reach into the physical cryptocurrency sector, complementing its technology-driven blockchain infrastructure.

Coinme Faces Regulatory Challenges

While Polygon moves forward with its acquisition, Coinme faces regulatory scrutiny. The Washington State Department of Financial Institutions (DFI) recently ordered Coinme to halt its money transmission services. The DFI alleges that Coinme converted unredeemed customer funds into corporate revenue.

The regulator has ordered Coinme to repay over $8 million to affected customers. Coinme’s actions involved instructing customers to purchase paper vouchers at kiosks, which could be redeemed online. If the vouchers were not redeemed in time, Coinme claimed the funds as its own, leading to the current legal complications.

Potential Penalties for Coinme

The regulatory issues facing Coinme extend beyond the $8 million repayment. The DFI’s action could result in Coinme losing its money transmission license. Additionally, the company faces a potential fine of $300,000 and a ten-year industry ban for its CEO, Neil Bergquist. These complications could pose a significant hurdle to Coinme’s operations in Washington state.

Despite these regulatory challenges, Polygon’s acquisition of Coinme appears to be progressing. Polygon’s recent $450 million funding round, led by Sequoia Capital India, has provided the network with ample capital to pursue strategic acquisitions. The deal represents an expansion of Polygon’s ambitions beyond its Ethereum scaling focus.

This potential acquisition underscores Polygon’s interest in growing its consumer-facing infrastructure. Coinme’s widespread Bitcoin ATM network would provide a physical presence for Polygon’s blockchain ecosystem.

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