CEDAR FALLS — An Iowa man who lost $11,500 to cryptocurrency scammers thought he had a chance to recover his money after police seized the cash from a Bitcoin ATM. But an Iowa Supreme Court ruling filed October 30, 2026, determined that a newer state law protecting cryptocurrency fraud victims could not be applied to his 2024 transaction.
The ruling highlights a difficult question for consumers, police and cryptocurrency businesses: when someone is tricked into sending Bitcoin to criminals, who should bear the financial loss?
For Gary VanderWerf, the answer became especially complicated after police seized the cash he deposited, a district judge declined to return it to the ATM company, and another judge later ordered it released to him while the company’s appeal was pending.
The Iowa Supreme Court reversed the original district court judgment and returned the case for further proceedings. It did not invalidate the state’s newer cryptocurrency consumer-protection law or order VanderWerf to immediately repay the money.
$11,500 disappears into a cryptocurrency wallet
The case began August 12, 2024, when VanderWerf responded to communications with three unidentified individuals who persuaded him to make a cryptocurrency transaction. He visited a Bitcoin Depot ATM inside the Prime Mart convenience store in Cedar Falls.
As a new customer, he was asked to review the machine’s terms. Those conditions said the deposited cash became Bitcoin Depot’s property when it supplied Bitcoin for transfer to the digital wallet designated by the customer.
The machine also warned that cryptocurrency transactions were final and irreversible and instructed customers to send Bitcoin only to wallets they controlled.
VanderWerf nevertheless deposited $11,500 and directed the resulting Bitcoin to a wallet controlled by the people who had deceived him. He soon realized he had been defrauded and reported the incident to the Cedar Falls Police Department.
On August 15, police executed a search warrant and seized $11,500 cash from the machine. Bitcoin Depot assisted the investigation, but the digital currency transferred to the scammers was never recovered. The investigation closed without criminal charges.
The case shows how victims can be tricked into authorizing a cryptocurrency transaction that is completed as instructed by the machine, even though the recipient turns out to be a criminal.
Similar Bitcoin ATM scams have targeted Iowans
VanderWerf was not the only Iowan targeted by people demanding cryptocurrency. In July 2023, NorthIowaToday.com reported on a woman tricked into sending $6,600 through a Bitcoin ATM by a caller impersonating a law enforcement officer.
In July 2026, the Hancock County Sheriff’s Office warned about an ankle-monitor scam in which callers demanded Bitcoin payments from families of jail inmates.
The subject also has a larger consumer-protection dimension. In February 2025, NIT reported on Attorney General Brenna Bird’s lawsuits against cryptocurrency ATM businesses over alleged losses suffered by Iowa consumers. Those lawsuits are separate from VanderWerf’s return-of-property proceeding.
Iowa lawmakers establish new cryptocurrency ATM protections
In 2025, lawmakers enacted Iowa Code Section 533C.1004 to address fraud involving digital financial asset transaction kiosks. The new requirements became applicable to operators July 1, 2025 — nearly a year after VanderWerf’s transaction.
Among other provisions, the law sets a $1,000 daily limit on covered kiosk deposits or withdrawals and a $10,000 limit for new consumers during their first 30 days.
It also provides a full refund remedy for qualifying new consumers fraudulently induced into transactions, subject to conditions including timely reporting to the operator and law enforcement and submitting proof of the fraud. The statute generally specifies a 90-day reporting period for those claims.
Those protections did not exist when VanderWerf inserted the $11,500.
Bitcoin ATM company demands seized cash
On July 18, 2025, Bitcoin Depot applied to the Iowa District Court for Black Hawk County for return of the $11,500 police had seized. The company argued the physical cash belonged to it under the transaction terms because it had transferred the corresponding Bitcoin to the specified wallet.
VanderWerf attended the hearing without an attorney and asked that he be allowed to recover at least part of the money, even if he could not receive the full amount.
The Black Hawk County Attorney’s Office said the cash was no longer needed as evidence but pointed out the newly enacted cryptocurrency kiosk refund protections.
District Judge Joel Dalrymple denied Bitcoin Depot’s application in August 2025, reasoning that the new refund provisions were in effect when the company filed the application and could give the fraud victim a claim. The judge did not order the money released to VanderWerf at that point.
Bitcoin Depot appealed the decision.
Supreme Court says new law cannot reach backward
In the October 30 decision, Justice Thomas Waterman wrote for four justices that Iowa statutes generally apply to future conduct unless the legislature expressly makes them retroactive.
The 2025 cryptocurrency kiosk law contained no language authorizing it to apply to earlier transactions. The court determined that imposing a new refund obligation on the company’s 2024 transaction would improperly attach a new legal consequence to conduct predating the statute.
The court pointed out that the company might have adopted additional safeguards in 2024 if it had known that operators would be obligated to refund transactions of this kind. Such measures could have included tighter deposit limits, transaction delays or additional wallet verification.
Because the new law could not govern the 2024 transaction, the court concluded that Bitcoin Depot had the superior claim to the seized cash under the law applicable at the time. It reversed the district court ruling and remanded the case.
An unexpected twist: the cash had already been paid to the victim
While Bitcoin Depot’s appeal was pending, VanderWerf filed a separate application to recover the same seized money. That case proceeded under a different docket number before District Judge Linda Fangman.
On December 18, 2025, Judge Fangman approved his application based on the State’s agreement and ordered the $11,500 returned to him. The money was released.
Bitcoin Depot had not received notice of the separate proceeding, and the order did not address the earlier ruling or the pending appeal. The Iowa Supreme Court learned about the separate order only shortly before oral arguments in September 2026.
The justices concluded that the release of the cash did not make the appeal meaningless. On remand, the company may raise arguments about the other order and possible remedies. Those questions were not resolved in the Supreme Court’s October ruling.
That distinction matters: the higher court’s decision did not itself require VanderWerf to immediately repay $11,500.
Three justices agree with result, but on different grounds
Although all seven justices agreed the earlier judgment should be reversed, they did not agree on the legal reasoning.
Justice Dana Oxley, joined by Justices Christopher McDonald and David May, wrote separately that even a valid statutory refund claim against a kiosk operator would not give a victim ownership of the particular cash deposited into the machine.
Under that analysis, an unsecured right to seek a refund from the company is different from a right to possess the specific currency seized by police. Oxley believed the return-of-property question could be decided without addressing retroactivity.
What Iowa cryptocurrency customers should know
The ruling does not eliminate the protections Iowa enacted for qualifying cryptocurrency kiosk transactions beginning in July 2025. But it makes clear those new legal obligations cannot automatically be imposed on older transactions.
The case also highlights the distinction between criminals tricking a person into sending cryptocurrency and the machine operator completing the purchase and transfer requested by the customer.
Because many cryptocurrency transfers cannot be reversed once completed, consumers should verify requests for payment and control of the destination wallet before committing money. People who suspect fraud should promptly contact the operator and police and preserve records, particularly because statutory refund remedies have notice and proof requirements.
A $11,500 dispute with consequences beyond Cedar Falls
The appeal was titled In the Matter of $11,500 Seized from Bitcoin Depot Operating, LLC, Iowa Supreme Court case No. 25-1639.
During the proceedings, Bitcoin Depot filed for Chapter 11 bankruptcy. Its claim to the seized cash was subsequently acquired by GDP Holdings, doing business as Coinflip, which continued the appeal as successor in interest.
The court’s decision establishes that Iowa’s 2025 cryptocurrency ATM refund law cannot be applied retroactively to VanderWerf’s 2024 transaction. What happens next in the dispute over the $11,500 must be addressed in district court.
The complete Iowa Supreme Court opinion in case No. 25-1639 is available through the Iowa Judicial Branch.