President Trump’s crypto controversy clash
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Two cybercrime victims won’t be able to recover their money, seized from a third-party cryptocurrency company, the Iowa Supreme Court has ruled.
The decisions, issued Friday, May 1, involve two Iowans who were targeted in nearly identical scams. In July 2023 and February 2024, the two were contacted by an unknown person online and told to purchase cryptocurrency at a Bitcoin ATM in Linn County, and to send the bitcoin to a digital wallet controlled by the scammers. One scammer claimed to be from the “Geek Squad” and said the victim’s accounts had been “compromised,” while the other claimed the victim had child pornography on their computer and demanded money not to turn the victim in, according to court filings.
Both individuals did as they were told, purchasing and sending more than $14,000 apiece in bitcoins. Both then contacted law enforcement officials, who, in the ensuing investigations, seized the cash deposited from the Bitcoin ATM. The purchased bitcoin, however, has not been recovered.
The question before the Iowa Supreme Court was, once investigators no longer need the money as part of their case, who gets it? In separate opinions on the cases, one by Justice Dana Oxley and the other unsigned, the justices reversed a lower court and ruled that ATM operator Bitcoin Depot should get to keep the cash.
Key to the decision is that the crypto ATM requires users to confirm they owned the wallets they were sending bitcoin to, and prominently warned users against scams.
“There is no evidence in the record before us that Bitcoin Depot had reason to know that a scammer had contacted (the victim) and told her that she needed to purchase bitcoins from the Bitcoin ATM and transfer them into a specified wallet to avoid her accounts being impacted,” Oxley wrote, holding that Bitcoin ATM had done nothing wrong and was entitled to keep the money.
An attorney for the victims and attorneys for Bitcoin Depot declined to comment.
Friday’s decisions are a win for Bitcoin Depot, but the company is embroiled in a larger struggle with the Iowa Attorney General’s Office, which sued it and another crypto ATM company in March. The state claims Iowans have lost more than $20 million in scams facilitated through the company’s ATMs and accused Bitcoin Depot and competitor CoinFlip of failing to protect users against scammers.
William Morris covers courts for the Des Moines Register. He can be contacted at [email protected] or 715-573-8166.
