Scams have come a long way from smooth-talking con artists in traveling medicine shows trying to sell you a bottle of snake oil that could cure all of your ills, remove stains from your clothing, and dye your hair. As technology has advanced, so too have the methods by which grifters can separate victims from their money, real estate, and other personal assets.
Oregon resident Karen Lacey, along with her husband Robert Lacey, have alleged in a proposed class-action lawsuit in federal court in the District of Idaho that Bitcoin Depot had not only failed to live up to its promise to protect against Bitcoin automatic teller machine (ATM)-related scams but also had violated the Idaho Consumer Protection Act (ICPA) by actively profiting from illegal activities.
In addition to seeking almost every type of financial damages available, the suit demanded an injunction requiring Bitcoin Depot to provide more than lip service against the financial predators who use its services. The Laceys are far from the first people to be scammed through the Bitcoin Depot ATMs, but they may be among the last. The company (which does not control the Bitcoin currency itself) filed for bankruptcy a week after the couple filed their suit.
Buying and Selling Crypto
Bitcoin emerged as the first decentralized, fully operational cryptocurrency in 2009. This means it’s not backed or protected by any of the usual financial institutions; instead, it relies on a decentralized network using a blockchain to record transactions.
There are currently several popular crypto exchanges, such as Binance, where standard forms of money can be exchanged for digital currency. The overwhelming number of these transactions are conducted online. Crypto ATMs began to appear in 2013, but Bitcoin Depot, founded in 2016, quickly established itself as one of the biggest players in the field. With a network of over 8,400 Bitcoin Depot ATMs across the U.S., Canada, and Puerto Rico, it offered the ability to instantly convert deposited cash into crypto.
As attractive as this was to their clients, it was even more alluring to financial predators. The Bitcoin Depot kiosks contained what appeared to be run-of-the-mill ATMs, but the ability to essentially make funds vanish into anonymous online wallets made them an invaluable tool for a new breed of scammers. Complaints from victims led to state investigations, new legislation, and group settlements for millions of dollars.
Citing changes in the industry, Bitcoin Depot filed for Chapter 11 bankruptcy on May 18, 2026, deactivating its entire fleet of machines. This occurred one week after the Laceys’ proposed class action was filed and will complicate efforts by everyone seeking to recover damages from the company.
The Laceys' Allegations
In 2025, Karen Lacey received an email stating that her Norton Antivirus account had been renewed. Wary of being scammed, she googled a customer service number instead of clicking through on a suspicious link. Unfortunately, the grifters were one step ahead, and her search returned an (unknown to her) fraudulent number. The suit alleges that she was told her bank accounts were compromised, and that the hackers had used the accounts for child pornography and illegal gambling. They were transferred to someone who presented themselves as an agent of the Federal Bureau of Investigation (FBI), who directed them to a (spoofed) .gov site that displayed what appeared to be official documents implicating them for these crimes.
The scammers made the Laceys believe they were under FBI surveillance, ordering them not to tell anyone because they were part of an active investigation. The next step was to instruct them to “safeguard” their money by withdrawing it all and depositing it into a “safe” government account. Terrified, the Laceys made four deposits totalling $76,000 at a Bitcoin Depot ATM in Idaho as directed by the “agent.” Unfamiliar with cryptocurrency, they needed help from Bitcoin Depot's customer service department to complete some of the transactions.
Scared, embarrassed, and feeling like the victims on a true-crime podcast, the Laceys didn’t fully realize they’d been scammed until months later. After coming to the conclusion that Bitcoin Depot wasn’t really interested in stopping scammers because it made far too much money from their transactions (and being offered only $2,000 by the company as compensation), the couple filed suit in the Idaho District Court.
A 50% Fee Wasn’t Enough?
The lawsuit alleges that Bitcoin Depot ATMs were the favored choice of scammers for three main reasons: it immediately converts the deposited cash to Bitcoin without involving bank accounts, credit cards, or any of the protections they offer; it instantly transfers the newly minted cryptocurrency to the designated account; and its willingness to send digital funds to “non-custodial” wallets, which provide anonymity to the holders.
This combination of real-time speed, convenience, and anonymity makes Bitcoin and crypto in general a popular choice for digital grifters. Bitcoin Depot argued that it posts online warnings about scams, publishes articles detailing some of the more successful cons, and offers a number of safeguards for its users, but the suit alleges that the company fell far short of providing the actual protections it promised. The plaintiffs claim this is because Bitcoin Depot made too much money to want to rein in the bad actors that use it.
As of January 2025, Bitcoin Depot’s fees ranged from 25% to 50% of each transaction amount. That changed in January 2026, when it switched to a flat $3 fee per transaction, along with an “open-ended” markup that removed the previous 50% cap. The suit argues that these rates gave the company a strong incentive to let criminals who use it run unfettered, as Bitcoin Depot has a history of contesting most fraud claims and retaining its share of stolen funds. It cites 2023 SEC reports filed by Bitcoin in which it admits that its “risk management policies may not be sufficient” and that its services “may be exploited to facilitate illegal activity such as fraud.”
The court filing also claims that Bitcoin Depot did little to stop those who further sidestepped identification through their Depot ATMs, as evidenced by a case in New York. While a salient claim, it may ultimately not matter in the face of Bitcoin Depot’s proposed Chapter 11 liquidation.
Can You Flip a Bitcoin?
Along with violations of the ICPA, the suit charges Bitcoin Depot with negligence, voluntary assumption of a duty, and unjust enrichment. As might be expected, it seeks actual, compensatory, consequential, incidental, and punitive damages, as well as attorneys’ fees and court costs. While there’s a healthy amount of precedent available to demonstrate Bitcoin Depot’s culpability in allowing scammers to use its kiosks to fleece victims (including an Iowa investigation alleging that over 98% of reported transactions through Bitcoin Depot operating ATMs were scam-related), the Laceys may have trouble collecting, even if their suit is successful.
Bitcoin Depot's Chapter 11 bankruptcy filing on May 18, 2026, which was just one week after the Laceys filed their lawsuit, may significantly complicate the couple's pursuit of damages. Under federal bankruptcy law, the filing triggers an automatic stay that halts most litigation against the debtor, meaning the Laceys' case will likely be suspended and transferred to the bankruptcy court in the Southern District of Texas.
The company has stated it intends to wind down operations, sell its assets, and establish a liquidation trust, with nearly $27 million in existing debt. This means the Laceys, along with potentially hundreds of other scam victims and the attorneys general from multiple states already suing Bitcoin Depot, will become unsecured creditors competing for payment from whatever remains after secured creditors are paid. Given that Bitcoin Depot's shareholders have been warned they "could experience a significant or complete loss of their investment," the Laceys' chances of recovering their $76,000, or even a meaningful portion of it, appear increasingly uncertain.
