Iowa Supreme Court Rejects Retroactive Bitcoin Fraud Law

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The Iowa Supreme Court ruled on October 30, 2026, that new cryptocurrency fraud protections cannot apply retroactively, reversing a lower court’s decision denying Bitcoin Depot’s claim to cash seized after a telephone scam.

The unanimous judgment concerned $11,500 in physical cash recovered from a Bitcoin ATM. Four justices joined the majority opinion, while three concurred in the judgment on different grounds.

How the Bitcoin ATM Dispute Began

On August 12, 2024, Cedar Falls resident Gary VanderWerf was deceived by three unidentified individuals into depositing money at a Bitcoin Depot kiosk inside Prime Mart Convenience Store. Bitcoin was transferred to the fraudsters’ wallet and never recovered.

The machine warned customers that “all Bitcoin transactions are final and irreversible.” Bitcoin Depot’s terms also stated that deposited cash became the operator’s property.

The Cedar Falls Police Department seized the currency under a search warrant on August 14, 2024. Following the investigation, Bitcoin Depot sought its return, but Black Hawk County District Court Judge Joel Dalrymple denied the application.

Why the Supreme Court Reversed

Iowa Code § 533C.1004 was enacted on May 19, 2025, and expressly applied to operators from July 1, 2025. It introduced a $1,000 daily transaction limit and conditional refund protections for cryptocurrency fraud victims.

Writing for the majority, Justice Thomas Waterman cited Iowa’s established rule: “A statute is presumed to be prospective in its operation unless expressly made retrospective.”

The justices concluded that the legislation contained no express retrospective provision. Applying its refund requirements to an earlier transaction would impose obligations that did not exist when the fraud occurred.

The State had argued that the legislation applied because it was already in force when the district court considered the operator’s application. The majority rejected that interpretation.

Cash Returned During Pending Appeal

The dispute became more complicated when the Supreme Court learnt on September 8, 2026, that the disputed money had already been released.

District Judge Linda Fangman had approved VanderWerf’s separate, unopposed application on December 18, 2025, without Bitcoin Depot receiving notice of the proceedings.

Despite the release, the justices determined that the appeal presented a live legal controversy.