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AI summary of a third-party reportBearishNewsDesk

California orders Coinflip to pay $4.8m to Bitcoin ATM scam victims

The state's financial regulator says Coinflip's weak customer checks and monitoring let scammers use its kiosks to drain victims' assets, and has ordered compensation plus a penalty.

Why it matters: State regulators are pursuing refunds and penalties against Bitcoin ATM operators, a market where impersonation scams have hit older users hardest.

InvestIn.News NewsDesk · 1 min read
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Picture from Bitcoin.com News for: California orders Coinflip to pay $4.8m to Bitcoin ATM scam victims
Image: Bitcoin.com News
Original reporting: Kevin Helms, Bitcoin.com News

Key points

  • The Department of Financial Protection and Innovation announced the order on 4 Nov, requiring more than $4.8m in victim compensation.
  • Investigators found transactions above California's $1,000 daily customer limit, missing written disclosures and incomplete receipts since 2021.

California's financial regulator has ordered Coinflip to pay more than $4.8m to victims of Bitcoin ATM scams, in an enforcement action against the operator of roughly 500 kiosks in the state. The Department of Financial Protection and Innovation announced the compensation order on 4 Nov, describing the payments as full compensation. Coinflip must also pay the agency over $350,000 in excessive fees it charged, according to the order.

Investigators said that since 2021 the company had failed to properly identify users and to detect, prevent, report and mitigate suspicious activity, allowing scammers to exploit customers and drain their assets. The agency cited the Digital Financial Assets Law, federal anti-money-laundering rules and the California Consumer Financial Protection Law.

The regulator said kiosk transactions are immediate, irreversible and hard to trace, and that older adults are especially vulnerable. In these impersonation scams, a QR code supplied by the fraudster sends the purchased cryptocurrency to a wallet the scammer controls.

California also ordered Coinflip to stop unlawful, unfair, deceptive or abusive practices, following earlier action against Hermes Bitcoin, RockItCoin, Coinme and Coinhub.

What to watch: Coinflip must pay the compensation and the excessive fees under the DFPI's 4 Nov order and halt the practices the agency identified as unlawful.

Read the full story on Bitcoin.com News

Live updates on NewsFeeds:BitcoinDesk editor: Keshav Aggarwal (accountable for this page; this summary was not edited by hand)

How this was produced: an AI model wrote this summary of Bitcoin.com News’s report, which we credit and link above. Read our Editorial and AI policy. Spotted a mistake? See Corrections.

Not investment advice. Read the risk disclaimer.

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