Delaware Court Denies Bitcoin Depot’s Request to Reactivate Iowa Kiosks Amid Legal Dispute
br>
On Monday, March 24, 2025, Law360 reported that Delaware’s Court of Chancery refused to order the reactivation of numerous bitcoin cryptocurrency ATM kiosks that were deactivated by an Iowa grocery chain following a lawsuit from that state’s attorney general. The legal dispute involves Bitcoin Depot Operating LLC, which sought a temporary restraining order after Fareway Stores Inc. shut down 66 of its machines.
Vice Chancellor Lori W. Will denied the request for immediate restoration of the kiosks, emphasizing that Delaware Supreme Court precedents require a factual record before any mandatory relief can be granted. The decision came after Fareway unplugged and covered the kiosks in response to allegations from the Iowa attorney general, who filed a lawsuit against both Bitcoin Depot and CoinFlip Inc. The lawsuit claims that these companies deceived consumers about their refund policies and imposed hidden transaction fees, leading to an estimated $20 million in losses for Iowa residents.
In her ruling, Vice Chancellor Will noted that while Bitcoin Depot argued for the restoration of the status quo, the current situation is not operational due to the kiosks’ shutdown. She stated, “I decline to exercise my discretion to impose mandatory relief that would force Fareway to turn the machines back on at this very early stage of the case,” highlighting the potential implications of the attorney general’s lawsuit.
The case will continue as Fareway has filed a motion to stay the proceedings in Delaware pending the outcome of the Iowa attorney general’s litigation. The vice chancellor ordered expedited proceedings regarding this motion, with a hearing set for April. Bitcoin Depot’s motions will remain on hold until the situation develops further.
K. Tyler O’Connell, an attorney representing Fareway, expressed concerns about the legal and reputational risks associated with operating the kiosks. He mentioned the potential harm to customers, particularly vulnerable individuals who may be targeted by scammers while using the machines. O’Connell pointed out that the grocery chain’s decision to deactivate the kiosks was a precautionary measure in light of the ongoing legal issues.
In contrast, Gene Y. Kang, representing Bitcoin Depot, argued that Fareway’s actions breached their contractual agreement, which prohibits unilateral deactivation without prior notice. Kang contended that Fareway’s motivations were driven by a desire to distance itself from the partnership amidst the allegations, rather than genuine concerns for customer safety.
Bitcoin Depot claims to operate one of the largest cryptocurrency kiosk networks in the United States and maintains robust fraud prevention measures, reportedly experiencing lower fraud rates compared to traditional financial services. Kang asserted that the existing agreement allows for a 30-day period to address any breaches, and does not permit termination based solely on subjective judgments concerning compliance.
Additionally, Bitcoin Depot alleged that Fareway threatened to treat the kiosks as abandoned if they were not removed within 30 days, indicating a potential further escalation in the dispute. Bitcoin Depot’s parent company, Lux Vending LLC, was noted to have operated approximately 7,000 ATMs across North America as of 2022, facilitating cash-to-cryptocurrency conversions.
Source: Law360
