Key Points

  • Iowa Code § 533C.1004, the 2025 law requiring Bitcoin ATM operators to refund certain fraud victims, operates only prospectively and does not govern cash deposited in a fraudulent transaction before the statute's enactment and effective date.
  • Bitcoin Depot was entitled under Iowa Code § 809.5 and the court's 2025 Bitcoin Depot Operating decision to the return of $11,500 seized from its Cedar Falls ATM in August 2024.
  • The court rejected the State's arguments that the statute's references to 'existing' consumers and a 2003 applicability date in neighboring § 533C.1003 made the refund law retroactive.
  • The appeal was not moot even though another district judge, without notice to Bitcoin Depot, released the cash to the fraud victim while the appeal was pending; Bitcoin Depot's remedies for that release go to the district court on remand.
  • Three justices concurred only in the judgment, reasoning that a statutory refund right is an unsecured claim against the operator that gives the victim no interest in the seized cash, so retroactivity need not be decided.

The Iowa Supreme Court ruled Friday that a 2025 state law requiring Bitcoin ATM operators to refund scam victims does not apply to a fraud committed in 2024. The decision reversed a trial judge who had relied on the new law to deny an operator the return of $11,500 that police seized from one of its machines.

All seven justices agreed that the operator, Bitcoin Depot, was entitled to the cash. Justice Waterman, writing for a four-justice majority, held that the refund statute, Iowa Code § 533C.1004, operates only prospectively. Justice Oxley, joined by Justices McDonald and May, concurred in the judgment but said the statute's timing was beside the point.

The ruling means the refund mandate, which took effect for kiosk operators on July 1, 2025, cannot be used to undo Bitcoin ATM transactions completed before that date. For those earlier frauds, the court's 2025 decision in Bitcoin Depot Operating, LLC v. Carlson still governs. In that case the court held that Bitcoin Depot, not a defrauded customer, had the greater right to cash seized from its machine.

On Aug. 12, 2024, Gary VanderWerf deposited $11,500 in cash into a Bitcoin Depot ATM at a Cedar Falls convenience store and sent a matching amount of bitcoin to a wallet he falsely said he controlled. The terms he accepted provided that deposited cash becomes Bitcoin Depot's property, and the screen warned that "all Bitcoin transactions are final and irreversible." Police seized the cash three days later under a search warrant. The bitcoin was never recovered, and the investigation closed without charges.

In 2025 the legislature enacted § 533C.1004 to regulate cryptocurrency kiosks. The statute caps a customer's deposits at $1,000 per calendar day, requires operators to refund fraud victims under specified conditions and sets a civil penalty of up to $10,000 per violation. Its applicability clause states, "This Act applies on or after July 1, 2025 to operators." It contains no express retroactivity provision.

Bitcoin Depot applied for return of the cash in July 2025 under Iowa Code § 809.5, which governs the return of property seized in criminal investigations. Black Hawk County District Judge Joel A. Dalrymple acknowledged that Carlson would entitle the company to the money. The judge ruled, however, that the new statute was in effect when the company applied and that its refund provision for new customers defeated the claim.

The majority applied Iowa Code § 4.5, which provides, "A statute is presumed to be prospective in its operation unless expressly made retrospective." Bitcoin Depot had no refund obligation in August 2024, Justice Waterman wrote, and the trial court's reading attached new liability to a completed transaction. "The district court effectively changed the rules after the game was played," the opinion said.

Had Bitcoin Depot known in 2024 that "it would be required to refund scam victims, it could have implemented additional safeguards to limit its liability," Justice Waterman wrote, listing deposit caps, a delay before issuing currency and authentication of customers' wallets. "The law is fair when the law is certain," the majority added.

The court rejected each of the State's arguments for reaching back. The State had contended that the statute's separate treatment of "new" and "existing" consumers showed the legislature meant to cover people already using the machines. The majority answered that the statute's daily and 30-day deposit limits "obviously cannot be applied to transactions that have already occurred." It declined to "slice and dice" the statute by applying some provisions retroactively but not others.

The court also refused to borrow an Oct. 1, 2003, applicability date from a neighboring section of the same chapter. The newer, more specific provision controls, the majority held. It noted that in 2024 the legislature had expressly made other amendments to the chapter retroactive. "If the legislature wanted § 533C.1004 to apply to fraudulent bitcoin transactions preceding its enactment, it would have said so in that enactment, just as it did for other sections of chapter 533C," Justice Waterman wrote.

Justice Oxley's concurrence rested on one of Bitcoin Depot's alternative arguments, which the majority did not reach. A proceeding under chapter 809 turns on interests in the seized property itself, the concurrence reasoned, while the refund law gives a victim at most an unsecured claim, a right to payment from the operator that is not tied to any particular asset. "An unsecured claim against the owner of seized property has no effect on the owner's entitlement to possession of that property," Justice Oxley wrote. "There is no reason to discuss retroactive application of a statute that wouldn't apply in any event."

Two days before the September 2026 argument, the State's appellate counsel disclosed an order entered more than nine months earlier under a different docket number. In it, District Judge Linda Fangman had granted VanderWerf's own application for the cash "based upon the agreement of the State," and the money was released to him. Bitcoin Depot received no notice of that proceeding.

The court held the appeal was not moot, meaning a live dispute remained despite the release of the money. If Bitcoin Depot prevailed, the majority reasoned, it could challenge Judge Fangman's order on remand and argue that the State owes it the value of the cash. "We have a live controversy, not a merely academic issue to decide," Justice Waterman wrote. The court also denied Bitcoin Depot's motion to strike the State's appearance, allowing the State to defend the judgment as appellee.

Bitcoin Depot filed for Chapter 11 bankruptcy, and its claim to the cash passed to GDP Holdings, doing business as Coinflip, which replaced it as appellant.

Mark E. Weinhardt of Weinhardt & Lantz, P.C., argued for the appellant. The State was represented by the office of Iowa Attorney General Brenna Bird.

The court reversed Judge Dalrymple's order and remanded the case. The district court must decide in the first instance what remedies Bitcoin Depot has for "the arguably premature release of the $11,500 cash."