Washington Moves to Revoke Coinme’s Bitcoin ATM License, Demands $8.37M Repayment Over Unredeemed Vouchers

Washington state regulators escalated their scrutiny of Bitcoin ATMs, ordering Coinme to stop serving local customers and to repay more than $8.37 million tied to unredeemed crypto vouchers. The Department of Financial Institutions (DFI) issued a temporary cease-and-desist and Statement of Charges alleging the Seattle-based operator treated unredeemed vouchers as income, violating the state’s Uniform Money Services Act. The agency signaled its intent to revoke Coinme’s money transmitter license, levy a $300,000 civil penalty and a $375 investigation fee, and pursue a 10-year prohibition for both the company and CEO Neil Bergquist from participating in money transmission.

The accounting is the center of gravity here. Between January 2023 and December 2024, Coinme reportedly recognized $8.37 million of unredeemed vouchers as revenue—$2.2 million from Washington customers at year-end 2023 and $6.17 million from Washington and non-Washington customers at year-end 2024. In retail, “breakage” on gift cards is a known—if controversial—practice. In money transmission, that mindset is a category error. Vouchers that represent fiat paid for crypto are customer funds until redeemed or escheated. Booking them as income without clear disclosures or abandoned property remittance invites regulatory blowback, because it looks like the firm benefitted from customer forgetfulness rather than safeguarding custodial value.

DFI’s order reaches beyond the voucher accounting. From 2020 through 2025, the agency says Coinme did not always maintain the director-required tangible net worth, kept inconsistent permissible-investment records, and filed inaccurate or late annual reports. The remedy is muscular and consumer-first: Coinme must cease Washington activity except to return funds, segregate state customer assets into individual accounts, and pay restitution equal to the greater of what each user paid or the crypto’s value on the date of the order. That “greater-of” formulation can be expensive in volatile markets, but it aligns incentives toward timely redemptions and proper custody.

Coinme has 20 days from service to request an adjudicative hearing; if it doesn’t, the temporary order becomes permanent on the 21st day. That clock matters. Once permanent, the operational pivot becomes a de facto shutdown in Washington until compliance fixes and appeals resolve.

The industry context isn’t flattering. California’s regulator recently fined Coinhub $675,000 for overcharging, with $105,000 earmarked for restitution. Earlier this year, the same California office fined Coinme $300,000 for excessive markups, accepting cash above the $1,000 daily cap, and missing receipt disclosures, directing $51,700 to customers. This pattern suggests kiosk models often push the edges on fees and controls to make unit economics work, then struggle when regulators demand money-transmitter-grade governance.

Insiders close to the kiosk segment have framed Coinme’s situation as operational mismanagement rather than loss or theft. That read tracks with the facts: a phased-out voucher product, weak support processes, and breakage-like accounting applied where it doesn’t fit. It’s a solvable problem set—ledger integrity, escheatment workflows, transparent disclosures, and capital buffers—but it requires cultural discipline more common in payments than in retail.

My take: this is less about malevolence and more about incentives. Breakage can look like easy revenue; in custodial finance it is a liability until proven otherwise. Recognizing that, and building systems to route unclaimed funds toward proper escheatment rather than the P&L, is table stakes. Ethically, leaning on customer inattention erodes trust; commercially, it’s a sugar high that compounds regulatory risk; technically, it’s a data and segregation challenge; operationally, it demands a compliance muscle many kiosk operators underinvest in.

Expect tighter surveillance on Bitcoin ATM fee practices, cash limits, disclosures, and custodial accounting. The near-term impact is margin compression for kiosks and likely consolidation around operators that already think like licensed money transmitters. For users, the signal is clear: regulators are prioritizing restitution and clarity over ambiguity in cash-to-crypto rails. For operators, the lesson is simpler—treat unredeemed value like customer money, because in this regime it is.