Washington state regulators ordered Seattle-based cryptocurrency firm Coinme to cease transmitting cash for patrons within the state, alleging the startup improperly claimed greater than $8 million in buyer funds as its personal revenue.
The Washington State Division of Monetary Establishments (DFI) introduced Monday that it issued a brief cease-and-desist order and assertion of fees in opposition to Coinme, which lets folks purchase crypto with money at kiosks nationwide and says it runs the most important crypto money community on the planet.
DFI mentioned Coinme improperly handled greater than $8 million owed to clients on unredeemed crypto “vouchers” as firm revenue. The company mentioned Coinme didn’t adequately disclose how and when it will acknowledge these unredeemed quantities as income and failed to show unclaimed funds over to the state as required below Washington’s unclaimed property legal guidelines.
DFI mentioned these points quantity to unfair and misleading practices and “unsafe and unsound” conduct that would result in insolvency or lack of buyer funds.
DFI additionally alleged that Coinme failed to take care of required monetary reserves, filed inaccurate reviews, and listed an inactive buyer assist cellphone quantity on vouchers for a number of months final yr. The corporate had a unfavorable tangible web value at year-end 2022, 2023, and 2024, in keeping with the fees.
The company is in search of to revoke the corporate’s cash transmitter license, impose a $300,000 high-quality, and ban CEO and co-founder Neil Bergquist from Washington’s cash transmitter and currency-exchange business for 10 years.
“Washington’s cash transmission legal guidelines exist to guard shoppers that depend on licensed corporations to securely transmit funds,” DFI Director Charlie Clark mentioned in a press release. “When our investigations reveal critical violations, we’ll take applicable motion.”
Coinme pushed again on the allegations, calling it an accounting dispute over a discontinued product. In a press release, the corporate mentioned it eradicated the voucher system in August 2023 and now credit purchases immediately to buyer accounts.
“Following skilled steering, we handled unredeemed voucher funds the identical method main retailers deal with unredeemed present playing cards — a broadly accepted accounting follow,” Ben Enea, Coinme’s chief compliance officer, mentioned in a press release.
The corporate mentioned all vouchers can nonetheless be redeemed at any time with no expiration date, and clients can request refunds in U.S. {dollars} if they like. Coinme famous that the unredeemed vouchers signify lower than 1% of the greater than $1 billion in transactions the corporate has processed since its 2014 founding.
Coinme additionally expressed frustration with the regulatory course of, claiming it wasn’t contacted throughout the investigation and solely realized of the considerations when the order was introduced.
Below the short-term order, current Washington clients can nonetheless withdraw their property however no new enterprise is permitted.
The corporate, which raised $10 million in 2021, was licensed by Washington state in April 2014 and shortly after launched its first “Bitcoin ATM.” It now operates cryptocurrency kiosks by partnerships with MoneyGram and Coinstar.
Coinme mentioned it has requested an administrative listening to to contest the order.
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