Washington state regulators ordered Seattle-based cryptocurrency company Coinme to stop transmitting money for customers in the state, alleging the startup improperly claimed more than $8 million in customer funds as its own income.
The Washington State Department of Financial Institutions (DFI) announced Monday that it issued a temporary cease-and-desist order and statement of charges against Coinme, which lets people buy crypto with cash at kiosks nationwide and says it runs the largest crypto cash network in the world.
DFI said Coinme improperly treated more than $8 million owed to customers on unredeemed crypto “vouchers” as company income. The agency said Coinme did not adequately disclose how and when it would recognize those unredeemed amounts as revenue and failed to turn unclaimed funds over to the state as required under Washington’s unclaimed property laws.
DFI said those issues amount to unfair and deceptive practices and “unsafe and unsound” conduct that could lead to insolvency or loss of customer funds.
DFI also alleged that Coinme failed to maintain required financial reserves, filed inaccurate reports, and listed an inactive customer support phone number on vouchers for several months last year. The company had a negative tangible net worth at year-end 2022, 2023, and 2024, according to the charges.
The agency is seeking to revoke the company’s money transmitter license, impose a $300,000 fine, and ban CEO and co-founder Neil Bergquist from Washington’s money transmitter and currency-exchange industry for 10 years.
“Washington’s money transmission laws exist to protect consumers that rely on licensed companies to safely transmit funds,” DFI Director Charlie Clark said in a statement. “When our investigations reveal serious violations, we will take appropriate action.”
Coinme pushed back on the allegations, calling it an accounting dispute over a discontinued product. In a statement, the company said it eliminated the voucher system in August 2023 and now credits purchases instantly to customer accounts.
“Following professional guidance, we treated unredeemed voucher payments the same way major retailers treat unredeemed gift cards — a widely accepted accounting practice,” Ben Enea, Coinme’s chief compliance officer, said in a statement.
The company said all vouchers can still be redeemed at any time with no expiration date, and customers can request refunds in U.S. dollars if they prefer. Coinme noted that the unredeemed vouchers represent less than 1% of the more than $1 billion in transactions the company has processed since its 2014 founding.
Coinme also expressed frustration with the regulatory process, claiming it wasn’t contacted during the investigation and only learned of the concerns when the order was announced.
Under the temporary order, existing Washington customers can still withdraw their assets but no new business is permitted.
The company, which raised $10 million in 2021, was licensed by Washington state in April 2014 and soon after launched its first “Bitcoin ATM.” It now operates cryptocurrency kiosks through partnerships with MoneyGram and Coinstar.
Coinme said it has requested an administrative hearing to contest the order.
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