California Department of Financial Protection and Innovation: Orders Coinflip to Compensate Bitcoin ATM Scam Victims

The California Department of Financial Protection and Innovation (DFPI) has ordered cryptocurrency ATM operator Coinflip to compensate local scam victims over $4.8 million and to pay over $350,000 in illegally collected excess fees to regulators. The order involves approximately 500 devices operated by Coinflip in California and requires them to cease illegal activities.

The investigation found that since 2021, Coinflip has failed to adequately identify users and has not effectively detected, prevented, reported, or mitigated suspicious activities. Relevant transactions also exceeded California's daily customer limit of $1,000, and there were issues such as failure to provide written disclosures before purchases and incomplete receipt information. DFPI stated that scammers impersonate trusted institutions, falsely claiming that there are problems with accounts or computers, and induce victims to withdraw cash and transfer funds through nearby ATMs; the cryptocurrency purchased by victims by scanning QR codes is transferred to the scammers' wallets. Regulators pointed out that the elderly are particularly vulnerable to such scams.