Bitcoins
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- Iowa’s high court has ruled Bitcoin Depot is entitled to $14,100 seized from one of its ATMs
- The customer who deposited the funds claimed she was defrauded into sending crypto to a scammer’s wallet
- The court found no evidence that Bitcoin Depot knew of the customer’s duress and affirmed its contractual rights
In a ruling that could shape how courts treat crypto ATM transactions, the Iowa Supreme Court has sided with Bitcoin ATM supplier Bitcoin Depot in a legal dispute over $14,100 in cash seized from one of its machines. The funds were deposited by Carrie Carlson, a Cedar Rapids woman who said she was scammed into transferring bitcoin to a fraudster posing as a Geek Squad agent. Though Carlson claimed she was a victim, the court found that the funds rightfully belonged to Bitcoin Depot under the terms of their contract.
Bitcoins A Scam, a Seizure, and a Standoff
On February 9, 2024, Carlson deposited $14,100 in cash into a Bitcoin Depot ATM located inside a Cedar Rapids gas station. Bitcoin Depot immediately transferred an equivalent value of 0.2296 BTC to a wallet Carlson had specified. Shortly afterward, Carlson reported to the Linn County Sheriff’s Office that she had been defrauded.
Law enforcement obtained a warrant and seized the cash, which had not yet been collected from the ATM. Both Carlson and Bitcoin Depot filed competing claims for the money under Iowa’s return-of-seized-property statute. In April, a district court sided with Carlson, but Bitcoin Depot appealed.
Bitcoins Contract Prevails Over Duress
Writing for a unanimous court, Justice Oxley reversed the lower court’s ruling, stating, “We conclude that Bitcoin Depot has the greater right to possession of the seized funds,” noting that Carlson had entered into a binding contract that transferred ownership of the cash to Bitcoin Depot in exchange for Bitcoin.
Bitcoin Depot’s assistant general counsel, Joel Rimby, submitted an affidavit explaining that users must certify they are sending crypto to their own wallet, and that once cash is deposited, it becomes company property. The court noted, “Bitcoin Depot transferred Bitcoins from its own inventory to the specified wallet, thereby giving value.”
While Carlson argued the contract was voidable due to third-party duress, the court rejected that claim, finding “no evidence in the record before us that Bitcoin Depot had reason to know that a scammer had contacted Carlson.”
Bitcoins A Warning Isn’t an Admission
Carlson had argued that a fraud warning displayed on the ATM proved Bitcoin Depot was aware of such scams. The justices disagreed, however, likening the warning to product liability disclaimers: “Bitcoin Depot’s generalized notice was insufficient to establish that it had ‘reason to know’ of Carlson’s particular duress.”
Ultimately, the court ruled that Carlson’s remedy, if any, lies not with Bitcoin Depot but with law enforcement or other avenues of fraud restitution. The seized funds, it concluded, must be returned to Bitcoin Depot.
The ruling could have significant long-term implications for the crypto industry, particularly in how courts interpret liability and ownership in digital asset transactions. By affirming that Bitcoin Depot retained rightful possession of deposited funds—even when the customer was defrauded by a third party—the court underscored the legal enforceability of crypto ATM contracts and the limited obligations of service providers in fraud scenarios they did not directly facilitate.
Mark Hunter Read More