California regulators have imposed a $675,000 penalty on Coinhub, a major Bitcoin ATM operator, for repeatedly violating state laws designed to protect consumers. The fine includes $105,000 that must be returned to customers who were overcharged at the company’s cryptocurrency kiosks.
The California Department of Financial Protection and Innovation (DFPI) announced the enforcement action on October 30, 2025. This marks the fourth time in recent months that California has cracked down on crypto ATM companies for breaking the rules.
What Coinhub Did Wrong
Nevada-based LSGT Services, LLC, which operates under the name Coinhub, broke multiple California laws starting in January 2024. The company runs Bitcoin ATMs throughout the state that let people exchange cash for cryptocurrency.
According to the official consent order, Coinhub committed several violations. The company accepted cash transactions over $1,000 per day from the same customers, even though California law sets a strict $1,000 daily limit. Some transactions exceeded $10,000—more than ten times the legal maximum. Many of these oversized transactions involved customers over 60 years old.
Coinhub also charged fees above the legal limit and failed to give customers proper warnings before transactions. The machines didn’t print complete receipts, leaving out required information like the operator’s name and the exchange used to set prices.
Source: dfpi.ca.gov
“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,” said DFPI Commissioner KC Mohseni. “We welcome legitimate operators in this industry, however, DFPI will not tolerate those who flout the law and fail to implement required safeguards for customers.”
California’s New Crypto ATM Rules
California passed the Digital Financial Assets Law (DFAL) in 2023, with enforcement beginning January 1, 2025. The law creates specific rules for crypto ATM operators to protect consumers from fraud and hidden fees.
Under the law, operators cannot accept more than $1,000 in cash per customer per day. Fees are capped at either $5 or 15% of the transaction amount, whichever is higher. Before each transaction, operators must provide clear written disclosures showing all fees, exchange rates, and warnings that crypto transactions cannot be reversed.
The law also requires detailed receipts that include the operator’s name, all charges, and information about the exchange rate used. These requirements aim to bring transparency to an industry that has been linked to rising fraud cases.
Why Bitcoin ATMs Attract Scammers
Bitcoin ATMs have become a favorite tool for scammers targeting vulnerable people, especially older adults. The machines allow quick cash-to-crypto conversions, and once cryptocurrency is sent, it’s almost impossible to get back.
On August 4, 2025, the federal Financial Crimes Enforcement Network (FinCEN) issued an urgent warning about crypto ATM scams. The FBI’s Internet Crime Complaint Center received nearly 11,000 complaints about these machines in 2024, with victims losing approximately $246.7 million—a 99% increase in complaints and a 31% jump in losses compared to 2023.
The problem hits older Americans the hardest. Federal Trade Commission data shows that people aged 60 and over were more than three times as likely as younger adults to lose money using crypto ATMs. These older victims accounted for more than two out of every three dollars lost to fraud through these machines.
Scammers typically call victims pretending to be bank employees, government officials, or tech support workers. They create urgent situations and walk victims through withdrawing cash and converting it to cryptocurrency at nearby ATMs. Once the crypto is sent to the scammer’s wallet, the money is gone forever.
Growing Crackdown on Crypto ATM Industry
California’s action against Coinhub is part of a broader enforcement effort. Since June 2025, DFPI has taken action against multiple crypto kiosk operators. In June, the agency fined Coinme $300,000 for similar violations, including $51,700 in restitution. The agency also issued orders against Wyoming-based Coin Time LLC and Southern California’s Anh Management, LLC (operating as Hermes Bitcoin).
The enforcement wave isn’t limited to California. In mid-June 2025, Spokane, Washington, became the first U.S. city to ban crypto ATMs entirely due to concerns about scams and financial crimes. New Zealand moved to ban cryptocurrency ATMs in July 2025, citing rising fraud concerns.
Other jurisdictions are also taking action. Australia now limits Bitcoin ATM transactions to $3,300, and authorities there have refused to renew licenses for operators deemed too risky.
What Happens Next
Under the consent order signed October 30, 2025, Coinhub must pay the full $675,000 penalty and provide restitution to affected California consumers within 60 days of regulatory approval. The company must also implement new policies and procedures to comply with California law and submit progress reports to regulators every 60 days for one year.
Coinhub has faced legal troubles beyond California. In February 2025, a Wisconsin appeals court ruled against the company in a case involving $20,000 seized from one of its ATMs after a customer was scammed.
The company’s CEO, Logan Short, stated in an email to media that Coinhub does “everything in its power to protect consumers, but unfortunately fraud is not 100% preventable in any industry.” The company is registered with FinCEN as a money services business, as required by federal law.
Source: https://bravenewcoin.com/insights/california-hits-bitcoin-atm-operator-coinhub-with-675000-fine-for-breaking-consumer-protection-laws
