Bitcoin Depot Criticizes Law Enforcement Over $32,000 ATM Seizure

Bitcoin Depot, a prominent provider of Bitcoin ATMs, has criticized law enforcement tactics following a raid on one of its kiosks in Texas. The incident involved authorities seizing $32,000 from a Bitcoin Depot machine using force, which the company claims has resulted in significant damage to the ATM. Chris Ryan, the Chief Legal Officer of Bitcoin Depot, expressed his disapproval of the methods used by law enforcement, stating that they are overstepping their authority by seizing funds that belong to the company.

According to Scott Buchanan, the Chief Operating Officer of Bitcoin Depot, the forceful seizure of funds from the kiosk has rendered the machine unusable, necessitating a complete replacement. Ryan emphasized that law enforcement is responsible for the damages incurred, despite their efforts to return funds to users who have been scammed. He highlighted that the company is entitled to keep the cash seized from the ATMs, as the transactions are completed once the user's Bitcoin is funded into their chosen wallet.

Ryan also pointed out that law enforcement often lacks an understanding of the company's business model and the fact that the Bitcoin has already been stolen from the customer. He noted that the company feels for the victims of these scams but maintains that the seized funds are rightfully theirs. Ryan further stated that law enforcement frequently seizes funds from Bitcoin Depot without following proper warrant procedures, sometimes even threatening to break into the machines.

The issue of Bitcoin ATM scams has been on the rise in the United States, with scammers exploiting the irreversible nature of transactions to defraud victims. These criminals often impersonate government agencies, law enforcement, or banks to deceive their targets. In 2024, Americans lost at least $247 million to crypto scammers through crypto kiosks, marking a 31% increase from the previous year. Once the scammer receives the victim's Bitcoin, recovering the funds becomes extremely difficult.

When a customer uses a Bitcoin ATM, they insert cash into the machine, which then sells an amount of Bitcoin directly to the user. The user must provide a wallet to receive the Bitcoin, and in many scam cases, the wallet provided belongs to the scammer, resulting in the Bitcoin being sent directly to the criminal. This has led to confusion in court, as authorities often present warrant requests that incorrectly state the victims lost cash as part of the proceeds of crime, rather than the Bitcoin stolen by the scammers.

Ryan also noted that law enforcement will seize funds from Bitcoin Depot in a year, with most actions not involving brute force. However, there is a subset of law enforcement that does not go through the warrant process at all, sometimes threatening to break into the machines. The Iowa Supreme Court ruled in two cases this year that Bitcoin Depot is entitled to the cash paid by victims for their Bitcoin transactions, primarily due to the company's terms and services, which require depositors to present wallets that belong to them. Bitcoin Depot also warns users that third-party addresses could result in a scam.