The Iowa Supreme Court ruled that Bitcoin Depot is entitled to retain $28,000 deposited by scam victims, reversing a lower court’s decision and sparking debate over consumer protections in cryptocurrency transactions.
At a Glance
- Iowa Supreme Court ruled Bitcoin Depot can keep $28,000 deposited by scam victims.
- Victims were coerced into sending funds via Bitcoin Depot ATMs in 2023 and 2024.
- The court found victims entered valid contracts, despite being scammed.
- Bitcoin Depot had issued scam warnings and required wallet ownership confirmation.
- The ruling raises concerns about consumer protection in crypto transactions.
Court Upholds Bitcoin Depot’s Claim to Funds
In a pivotal decision, the Iowa Supreme Court ruled that Bitcoin Depot, a major cryptocurrency ATM operator, has the legal right to retain approximately $28,000 deposited by scam victims. The two incidents occurred in July 2023 and February 2024, where individuals in Linn County were deceived into using Bitcoin Depot’s kiosks to transfer funds to scammers.
Though law enforcement had successfully seized the deposited cash during their investigation, the victims had already converted the funds to Bitcoin—an irreversible process—and sent them to scammers’ wallets. A lower court initially ruled that the victims were entitled to restitution. However, the state’s highest court overturned that decision, declaring that Bitcoin Depot fulfilled its contractual obligations.
Legal Basis and Industry Standards
The court emphasized that the victims had voluntarily completed the transactions through Bitcoin Depot’s ATMs and confirmed wallet ownership, which constituted binding contracts. The justices noted that Bitcoin Depot displayed fraud warnings and included clear disclaimers during the transaction process. These measures, according to the court, were sufficient to fulfill the company’s duty to inform users about potential scams.
As detailed in Decrypt’s coverage of the ruling, the decision signals a shift in how courts may treat third-party service providers in crypto-related fraud cases. The ruling underscores the burden on consumers to recognize scams before initiating irreversible blockchain transactions.
Watch a report: Iowa court sides with Bitcoin Depot over scam victims.
Consumer Protection and Crypto Risks
The ruling has sparked concern among consumer advocates who argue that the decision leaves victims of fraud with limited recourse. Because Bitcoin transactions cannot be reversed once completed, the decision effectively protects service providers even when their platforms are exploited by scammers.
Critics warn that this legal precedent may encourage minimalistic fraud-prevention measures among crypto ATM operators, shifting the risk entirely to consumers. They urge regulatory bodies to strengthen oversight and mandate more robust security protocols for all crypto kiosks.
Bitcoin Depot, which operates thousands of ATMs across the U.S., has maintained that it cannot be held liable for how users choose to transfer cryptocurrency. The court’s ruling appears to affirm that position—for now.
For full details, see Decrypt’s original report.
