Bitstop is asking a Miami federal court to block broad discovery demands from Chicago Atlantic Real Estate Finance, the lender suing the Bitcoin ATM operator for defaulting on a $30 million loan. The motion, filed January 27, 2025, argues that Chicago Atlantic's requests are "overly broad, unduly burdensome, and seek confidential business information" not relevant to the case.
But the timing is notable: Bitstop filed its fraud counterclaims against Chicago Atlantic first, alleging the lender knowingly misrepresented loan terms and engaged in "predatory lending." Chicago Atlantic's discovery requests are a direct response to those allegations — and now Bitstop wants to limit the evidence the lender can gather to defend itself.
Case: Chicago Atlantic Real Estate Finance, Inc. v. Bitstop, Inc.
Court: U.S. District Court, Southern District of Florida
Docket: 1:24-cv-23901
Motion Filed: January 27, 2025
What Bitstop Wants Protected
Bitstop's motion seeks to block or limit five categories of discovery requests from Chicago Atlantic:
Discovery Requests at Issue
The Problem: Bitstop's Own Fraud Claims
Bitstop's motion faces a fundamental obstacle: its own counterclaims put these issues in play. In its answer and counterclaims filed in November 2024, Bitstop alleged that Chicago Atlantic:
- Made "material misrepresentations" about loan terms and fees
- Engaged in "predatory lending" by charging excessive interest and fees
- Breached the implied covenant of good faith and fair dealing
- Violated Florida's Deceptive and Unfair Trade Practices Act (FDUTPA)
To prove those claims, Bitstop will need to show it relied on Chicago Atlantic's alleged misrepresentations, suffered damages, and had alternative financing options. That makes Bitstop's financial condition, business operations, regulatory status, and communications with other lenders directly relevant — the exact categories it now wants to shield from discovery.
Chicago Atlantic's opposition brief (not yet filed) is likely to argue: You can't allege fraud and then refuse to produce evidence of your own financial situation and business practices.
Why This Matters for Bitcoin ATM Operators
This discovery dispute reveals what lenders and investors are most interested in when evaluating Bitcoin ATM operators:
The fact that Chicago Atlantic is asking for regulatory correspondence is particularly significant. Bitstop is currently facing a cease and desist order from Nebraska for operating without a license, and the company is a defendant in other pending litigation. If Bitstop has received similar warnings or enforcement actions from other states, that information would be highly relevant to Chicago Atlantic's assessment of the company's financial health and loan repayment capacity.
The request for transaction data is also telling. Chicago Atlantic wants to know how much revenue Bitstop's ATMs are actually generating, what fees it's charging customers, and where its machines are located. That data would help the lender assess whether Bitstop has the cash flow to repay the loan — or whether the company's financial distress is structural.
Bitstop's Regulatory Record
Bitstop currently holds an F (0) trust score on the Bitcoin ATM News operator index, based on:
- 1 cease and desist order (Nebraska Department of Banking and Finance)
- 2 pending litigations (including this Chicago Atlantic case)
- Scam/fraud complaints from consumers
The company's regulatory compliance record stands in sharp contrast to operators like America Bitcoin ATM (A+ rating, clean record) and Coinhub (A+ rating, all actions resolved).
What Happens Next
Chicago Atlantic has 14 days from the motion's filing to file an opposition brief. The court will then decide whether to grant Bitstop's protective order in full, in part, or not at all.
Three possible outcomes:
Likely Scenarios:
- Full denial: The court finds all discovery requests relevant to Bitstop's fraud counterclaims and denies the protective order entirely.
- Partial protection: The court limits the time period covered (e.g., 2022-present instead of 2020-present) or narrows the scope of transaction data (e.g., aggregate revenue only, not individual customer transactions).
- Confidentiality agreement: The court orders the parties to enter into a protective order that allows discovery but restricts how Chicago Atlantic can use the information (e.g., "Attorneys' Eyes Only" designation for sensitive business data).
The most important signal will be whether the court addresses the elephant in the room: Can a defendant alleging fraud and predatory lending refuse to produce evidence of its own financial condition? If the court says no — and orders Bitstop to comply with the discovery requests — the operator's regulatory correspondence and transaction data will become part of the public record once introduced at trial or referenced in future motions.
For other Bitcoin ATM operators watching this case, the lesson is clear: If you allege fraud, expect your own business practices to be scrutinized in discovery. The protective order strategy works when you're purely defending against a lender's claims. It falls apart when you've made affirmative allegations that put your own financial health and business operations at issue.
Consumers researching Bitcoin ATM operators can check consumer protection resources for guidance on evaluating operator trustworthiness and avoiding scams.