Coinme, a Seattle-based startup that sells cryptocurrencies through kiosks, can restart sales in Washington after being shut down by state regulators for allegedly mishandling customer funds. Under a Dec. 23 consent order with the state Department of Financial Institutions, Coinme can resume cryptocurrency sales but must still address violations alleged in the agency’s Nov. 25 statement of charges. According to those charges, Coinme inappropriately kept funds customers paid for cryptocurrency vouchers at Coinme kiosks; misled consumers about how those vouchers were to be redeemed; and failed to maintain sufficient financial resources or adequate records, among other charges. Regulators had also ordered Coinme, which operates in tens of thousands of sites, to refund $8.4 million to customers for unredeemed vouchers.
The consent order pauses a Nov. 25 temporary cease and desist order that barred Coinme from “money transmission” in Washington, according to a statement on the state Department of Financial Institutions’ website. However, the agency’s “statement of charges” is still pending and was not resolved by the consent order, according to the agency. In a statement Tuesday, Coinme CEO Neil Bergquist said the company looks “forward to working with the Department of Financial Institutions to preserve our long-standing collaborative relationship that has been in place since our inception in 2014.” The company said the consent order came after it had provided the state with “detailed financial records and operational information that clarified key facts about the company’s business practices.”
The company has taken issue with a number of the state’s charges. Earlier in December, it said it had “treated unredeemed voucher payments the same way major retailers treat unredeemed gift cards,” and that its procedure followed standard industry practices and had been reviewed by the company’s auditors. On Tuesday, Bergquist reiterated that “if a customer is unable to redeem a voucher, they are eligible for a refund.” Bergquist and fellow entrepreneur Michael Smyers founded Coinme in Seattle in 2014 to make then-novel digital currencies readily accessible to consumers through a network of ATM-like kiosks.
That year, Coinme opened the first state-licensed bitcoin ATM in Seattle, after months of effort getting licensed as a “money transmitter.” Growing demand for cryptocurrency helped fuel Coinme’s growth. In 2019, the company announced a partnership to sell cryptocurrency via Coinstar, a Bellevue-based company whose kiosks let consumers exchange loose change for cash or credit. Coinme reported revenues of more than $1 billion in 2024.
Leave a Reply