In a controversial ruling, the Iowa Supreme Court sided with the operator of the Bitcoin Depot crypto ATM, ordering the return of $28,000 seized in fraud cases – not to the victims but to the company itself.
Money was stolen, but not refunded
The latest ruling from the Iowa Supreme Court overturned the decision of the lower court, which had previously ordered refunds for two victims of scams that occurred in July 2023 and February 2024. In both cases, the victims were tricked into transferring a total of $28,000 through the ATM located in Linn County.
Although the police confiscated the cash deposited into the machine while investigating the case, the BTC had already been sent, so it could not be recovered. The lower court argued that the money should be returned to the victims, but Bitcoin Depot appealed to the Supreme Court.
Court: “We warned you, it's not the company's fault”
According to Judge Dana Oxley, the victims agreed to the terms of use of Bitcoin Depot’s machine, which clearly warned about the risk of fraud and required confirmation that the BTC wallet belonged to them before completing the transaction.
One of the two victims, Carrie Carlson, argued that she was coerced and did not actually consent, but the court dismissed this reason as the company could not know that the user was being forced.
The court stated: “Bitcoin Depot's warning and requirement for users to confirm wallet ownership does not mean the company is responsible for all wrongful transactions.”
Final conclusion: seized money must be returned to Bitcoin Depot, while the victims are left… empty-handed.
Explosion of controversy and serious allegations
While winning the above case, Bitcoin Depot is still facing a larger legal battle in Iowa. Attorney General Brenna Bird filed a lawsuit against both Bitcoin Depot and rival company CoinFlip in February, accusing them of facilitating a series of cryptocurrency scams.
Specifically, Ms. Bird stated that the people of Iowa have lost approximately $20.4 million due to deposits made through the ATMs of these two companies. The data shows that 98.16% of the money deposited through Bitcoin Depot's ATMs since October 2023 is related to scams, while this rate for CoinFlip is 94.92%.
Additionally, both companies have been accused of charging extremely high fees – up to 23% (Bitcoin Depot) and 21% (CoinFlip) for each transaction, along with providing misleading information about their refund policy.
Bitcoin Depot responded: We are not standing by
In response to the wave of criticism, a representative of Bitcoin Depot stated that the company has implemented a series of anti-fraud measures such as identity verification, transaction monitoring, automatic alerts, and online support.
Notably, the company stated that it has a team of former law enforcement officials specifically dedicated to assisting in investigations, analyzing blockchain, and tracing stolen transactions, while affirming its commitment to continue supporting authorities.
Contacting the crypto market and users
The ruling of the Supreme Court sets an important legal precedent for the cryptocurrency industry: transactions through crypto ATMs are considered binding contracts, even when users are scammed. This raises alarm bells for the community, especially the elderly – a group that frequently becomes targets of malicious actors.
For Binance users and the entire crypto market, this event highlights the increasingly important role of user protection and transparency in the operation of cryptocurrency services. Users should be more cautious when transacting through public devices like crypto ATMs and prioritize reputable platforms with direct support and clear refund policies.
⚠️ Risk warning:
Investing and trading in cryptocurrency carries many risks. Users need to do thorough research before executing any transactions. The crypto market is not suitable for everyone – be cautious and always prioritize protecting personal assets.