Coinme, a Seattle-based startup that allows consumers to buy and sell cryptocurrency with cash or a debit card, has filed a lawsuit against Coinstar, its longtime partner, alleging that Coinstar misappropriated confidential information and trade secrets to launch its competing product called CINQ. Coinstar, based in Bellevue, Washington, is known for its kiosks that convert loose change into cash and gift cards. The two companies initially partnered in 2018 to enable bitcoin purchases at Coinstar kiosks, with Coinme providing proprietary APIs and information to integrate its technology into the kiosks.
However, Coinstar later developed its own platform called CINQ, which allows consumers to use cash to buy cryptocurrency at its kiosks and via a mobile app. Coinme claims that CINQ is very similar to its product and alleges that Coinstar copied its technology and platform, accusing them of misusing confidential and proprietary information to develop and deploy CINQ more quickly and effectively than they could have otherwise. Coinme also asserts that Coinstar gives preferential treatment to CINQ at the kiosks, leading to customer confusion and diverting business away from Coinme.
As a result of the launch of CINQ and alleged misuse of confidential information, Coinme claims that its transaction volumes at Coinstar kiosks significantly decreased in August. The startup is seeking damages for lost business, as well as an injunction to prevent Coinstar from using CINQ and further misusing its intellectual property. The lawsuit was filed in King County Superior Court on October 9, and both companies have declined to comment on the matter when contacted by GeekWire.
Coinme has been deployed in approximately 10,000 Coinstar kiosks across the country, with consumers having purchased around $1 billion worth of cryptocurrency through Coinme at these kiosks. The startup’s homepage currently features Coinstar’s branding and kiosks, while Coinstar’s website promotes Coinme. CINQ, Coinstar’s competing product, is powered by Zero Hash, a crypto tech startup. Coinme was founded in 2014 and created the first licensed Bitcoin ATM machine in the country, processing millions of dollars in monthly transactions. Coinstar, founded in 1991, was previously owned by Outerwall before being acquired by Apollo Global Management in 2016. Apollo split Outerwall’s core businesses, including Coinstar, into separate enterprises.
Overall, Coinme’s lawsuit against Coinstar alleges that Coinstar misused trade secrets and confidential information to develop and launch a competing product, CINQ, which directly impacted Coinme’s business and transaction volumes at Coinstar kiosks. The lawsuit seeks damages for lost business and an injunction against Coinstar using CINQ and further misusing Coinme’s intellectual property. The case highlights the complexities and legal challenges that can arise in partnerships and competition within the rapidly evolving cryptocurrency industry, where proprietary technology and information are crucial for success and differentiation. Both Coinme and Coinstar have significant histories in the crypto and kiosk industries, adding another layer of complexity to the lawsuit and potential outcomes for both companies.
