Bitcoin Depot Sued for $3M Over Alleged Refusal to Return $16,600 From Government Impersonation Scam

Bitcoin Depot is being sued for $3 million by a Washington, DC man who says the company refused to return $16,600 he deposited during a government impersonation scam — despite a customer service manager initially telling him he could retrieve the funds if he filed a police report.

The lawsuit, filed October 29, 2025, in the Circuit Court for the City of Alexandria, Virginia, alleges that Bitcoin Depot not only failed to implement adequate fraud protections but actively misled the victim about his ability to recover his money. The case adds to mounting legal and regulatory pressure on Bitcoin ATM operators over their role in consumer fraud schemes.

The Scam: Fake Marshals and a "Legitimate" ADR Process

On June 25, 2025, Javan Gaynor received calls from individuals impersonating officers from U.S. Customs and Border Protection and the U.S. Marshals Service, according to the complaint. The scammers told Gaynor his name was linked to a criminal investigation and threatened him with arrest unless he cooperated immediately.

Under what the complaint describes as "extreme psychological pressure," Gaynor withdrew $16,600 from his bank accounts and deposited the funds into a Bitcoin Depot kiosk at 1600 Mount Vernon Avenue in Alexandria, Virginia. The scammers told him this was part of a legitimate "Alternative Dispute Resolution (ADR)" procedure to safeguard his assets during an investigation.

Government impersonation scams targeting Bitcoin ATM users have become increasingly common. The Federal Trade Commission reported that cryptocurrency scams cost consumers $5.6 billion in 2023, with government impersonation scams accounting for a significant portion of reported losses.

The Refusal: Promises Made, Then Broken

After realizing he had been scammed, Gaynor immediately contacted Bitcoin Depot and the Alexandria Police Department, according to the complaint. A Bitcoin Depot customer service manager named "Josh" told Gaynor around 7:54 PM on June 25, 2025, that he would be able to retrieve the funds if the transaction was included in a police report.

But Bitcoin Depot subsequently denied the possibility of recovery, "despite earlier statements and written correspondence confirming willingness to cooperate with law enforcement," the complaint states.

The complaint alleges that Bitcoin Depot's response to the Office of the Attorney General acknowledged that multiple calls occurred between June 25-26, 2025, during which Gaynor sought assistance and a refund. The company's reversal forms the basis of one of the four legal claims against it.

The Legal Theory: Not Just Negligence, But Active Facilitation

Gaynor's complaint goes beyond standard negligence claims to argue that Bitcoin Depot actively facilitated the fraud by processing, validating, and transmitting the transactions "without adequate consumer protection systems in place."

The civil conspiracy claim is particularly significant because it invokes Virginia Code § 18.2-500, which allows for treble damages — potentially tripling the $16,600 loss to nearly $50,000 before punitive damages are even considered.

The Industry Context: Bitcoin Depot's Compliance Record

Bitcoin Depot is the largest Bitcoin ATM operator in North America, with over 8,000 kiosks across the United States. The company went public in 2023 via SPAC merger and has positioned itself as a compliance-focused operator in an industry plagued by fraud complaints.

But this lawsuit suggests a gap between Bitcoin Depot's public statements and its actual response to fraud victims. The complaint's focus on the company's alleged refusal to cooperate after initially promising to do so raises questions about whether operators use promises of recovery to delay victims from pursuing legal action or reporting to authorities.

The Financial Crimes Enforcement Network (FinCEN) has been pushing Bitcoin ATM operators to strengthen their anti-money laundering (AML) programs, particularly around fraud detection. In 2024, FinCEN issued guidance specifically addressing government impersonation scams involving cryptocurrency kiosks.

The Damages: Why $3 Million?

Gaynor is seeking $16,600 in compensatory damages — the amount he lost — plus $3 million in punitive damages. That's a ratio of roughly 180:1, far higher than typical punitive damages awards.

The complaint justifies this by arguing Bitcoin Depot acted with "willful disregard of foreseeable harm" and maintained a system that enables fraud "without sufficient oversight or cooperation with law enforcement." Punitive damages in Virginia are capped at $350,000 unless the defendant's conduct involved actual malice, in which case there is no cap.

Gaynor is also seeking treble damages under Virginia's civil conspiracy statute, which could triple the compensatory damages to approximately $50,000 before punitive damages are considered.

What Happens Next

Bitcoin Depot has 21 days from service of the summons to file an answer to the complaint. The company will likely move to dismiss some or all of the claims, arguing that it cannot be held liable for the actions of third-party scammers and that cryptocurrency transactions are irreversible by design.

But the negligent misrepresentation claim — based on the customer service manager's alleged promise that Gaynor could retrieve the funds — may be harder to dismiss. If Bitcoin Depot employees did tell Gaynor he could get his money back, the company will need to explain why it later reversed course.

The case also raises a broader question for the Bitcoin ATM industry: If operators know their kiosks are being used in government impersonation scams, do they have a legal duty to implement stronger fraud protections — or face liability when they don't?

We've reached out to Bitcoin Depot for comment and will update this story if we receive a response.