Coinme, a Seattle-based startup that allows consumers to buy and sell cryptocurrency with cash or a debit card, filed a lawsuit against Coinstar alleging that Coinstar misappropriated confidential information and trade secrets to launch a competing product called CINQ. Coinstar, based in Bellevue, Washington, first partnered with Coinme in 2018 to enable bitcoin purchases at its kiosks. Coinme provided APIs and other information to integrate its technology within Coinstar’s kiosks, and the companies shared revenue from transaction fees charged to consumers who bought cryptocurrency at the kiosks.
Coinstar later developed its own platform called CINQ that allows consumers to buy crypto with cash at its kiosks and via a mobile app. Coinme claims that CINQ is virtually identical to its product and alleges that Coinstar copied its technology and platform. Coinstar was able to develop and deploy CINQ more quickly and cost-effectively by misusing confidential and proprietary information obtained from Coinme. Coinme also claims that Coinstar gives preferential treatment to CINQ at the kiosks, leading to customer confusion and diverting business away from Coinme.
In August, Coinme noticed a substantial decrease in transaction volumes at Coinstar kiosks, coinciding with the rollout of CINQ across the country. Coinme alleges that Coinstar is using its intellectual property beyond the scope of agreements and is not protecting confidential information. The lawsuit seeks damages for lost business and an injunction preventing Coinstar from using CINQ, among other requests. Both Coinme and Coinstar declined to comment when contacted by GeekWire.
Coinme has been deployed in approximately 10,000 Coinstar kiosks across the country, with consumers purchasing around $1 billion worth of crypto from Coinme at these kiosks. Coinme’s homepage currently features Coinstar’s branding and kiosks, while Coinstar’s website promotes Coinme. CINQ is powered by Zero Hash, a cryptocurrency tech startup. Coinme was founded in 2014 and created the first licensed Bitcoin ATM machine in the country, handling millions of dollars in monthly transactions. Coinstar, founded in 1991, was previously owned by Outerwall before being acquired by Apollo Global Management in 2016 and split into separate enterprises.
