A Seattle-based cryptocurrency exchange company that serves the Tri-Cities area has resumed full operations after state regulators ordered it to stop collecting any new funds and refund customers, alleging the firm wrongfully claimed millions of dollars of wired funds as its own income.

The agreement means Coinme can continue to operate while a state Department of Financial Institutions (DFI) investigation is underway.

DFI issued the temporary restraining order and statement of charges against Coinme on Dec. 1 following an investigation into the firm’s money transmission and virtual currency kiosk operations. 

Coinme reached an agreement with DFI in late December after submitting financial records and operational information to clarify the company’s business practices.

DFI’s consent order with Coinme requires the company cease and desist from all violations of state laws related to safeguarding money transmission and currency exchange businesses, take remedial action to protect Washington customer assets in secure and segregated accounts and safeguard assets deposited at kiosks that were not redeemed by customers.

The action stays the earlier cease and desist order until DFI can determine whether to withdraw it or lift it. DFI said the stay means Coinme can resume money transmission in Washington, but that the statement of charges against the company is still pending and was not resolved by the consent order. 

Coinme CEO Neil Bergquist said in a statement that the company’s top priority is customer protection and regulatory compliance. “We look forward to working with the WA DFI to preserve our long-standing collaborative relationship that has been in place since our inception in 2014,” he said.

Coinme allows consumers to buy cryptocurrency such as Bitcoin at kiosks or ATMs. There are dozens of locations where the company offers its services, such as through CoinStar coin counting machines and its own kiosks at various retailers. 

DFI said its investigation revealed Coinme allegedly committed multiple violations of consumer finance protections. State regulators also pushed to revoke the company’s license to operate in the state. 

“Washington’s money transmission laws exist to protect consumers that rely on licensed companies to safely transmit funds,” said DFI Director Charlie Clark in a statement. “When our investigations reveal serious violations, we will take appropriate action.” 

DFI claimed Coinme inappropriately claimed more than $8 million owed to consumers as its own income when consumers did not redeem purchased currency vouchers during a specific timeframe.  

State regulators also alleged Coinme did not disclose material information to consumers about the time frame allowed to redeem vouchers and did not properly return unclaimed consumer property to the state as required by law.  

Among the other DFI allegations levied against the company: 

• Listing an inactive consumer support phone number on the vouchers provided to consumers. 
• Failed to maintain legally required tangible net worth. 
• Did not maintain records substantiating that the required level of permissible investment requirements were met. 
• Failed to timely report required information to DFI. 
• Filed inaccurate reports with DFI.