State of Iowa v. CoinFlip, petition (redacted)
Document text
Research, not advice. Part of the Bitcoin research archive (October 2026). Claims labelled unverified, contested or fringe are reported, not endorsed; statuses of bills and rules are as of the date checked. Government, court and patent records are public domain; the research notes are CC BY 4.0.
IN THE IOWA DISTRICT COURT FOR POLK COUNTY
STATE OF IOWA, ex rel. BRENNA BIRD, Equity No. ___________________
ATTORNEY GENERAL OF IOWA,
Plaintiff,
v. PETITION
GPD HOLDINGS LLC d/b/a COINFLIP,
Defendant.
Table of Contents
Introduction ................................................................................................................................... 2
I. Jurisdiction ........................................................................................................................ 5
II. Parties................................................................................................................................. 5
III. Factual Allegations............................................................................................................ 5
A. BTMs and Scams Go Hand-in-Hand .............................................................................. 6
C. CoinFlip’s Policies Are Insufficient to Address the Known Issues Related to Scams . 12
D. CoinFlip’s Warnings Are Ineffective at Preventing Scam Transactions ...................... 14
E. The Demographic Markets in Iowa for Scam Victims and BTMs Are Older Iowans .. 17
F. CoinFlip’s Profitability in Iowa Depends on Iowa Scam Victims ............................... 19
G. CoinFlip Profits From Iowa Scam Victims................................................................... 21
H. CoinFlip Hides the True Cost of Using a BTM From Iowa Consumers ...................... 22
I. CoinFlip Hides the Cost of Purchasing Using a BTM Behind Iowans’ Experience
with ATM Fees ............................................................................................................. 33
IV. Violations of the Iowa Consumer Fraud Act ................................................................ 33
A. Selling Bitcoin Through a Kiosk That Allows for Prevalent Scam Transactions is an
Unfair Practice .............................................................................................................. 34
B. CoinFlip Deceived Iowans About the Price of Bitcoin Purchased Through Its BTMs . 35
C. CoinFlip Misrepresents to Iowa Consumers That it Charges a Flat Fee .......................... 36
D. CoinFlip’s Violations of the Act Were Committed Against Iowa Consumers Sixty Years
of Age or Older............................................................................................................. 37
V. Conclusion and Prayer ................................................................................................... 37
The Appendix filed attached to this complaint is incorporated here by reference.
1
Introduction
1. Fraudsters and scammers update their deceptive practices to reflect new technology.
Here, Defendants are misusing the popular excitement around technologies like Bitcoin
and other cryptocurrencies to unfairly and deceptively put Iowa consumers in harm’s way
and take their piece of Iowans hard-earned money before sending the rest to scammers.
2. Cryptocurrencies are technologies often centered around recording transactions on a
public register, or blockchain. The details of that technology can be complicated and
nuanced. But what is not nuanced is using a veneer of association with cryptocurrencies
to defraud consumers.
3. Defendant GPD Holdings LLC d/b/a CoinFlip (hereinafter “CoinFlip”) profit when
scammers profit because of the unfair and unsafe business practices easily allowing
Iowans to send large sums of money to scammers—with a kickback to CoinFlip. So far,
Iowa has identified more than $13 million in fraudulent, scam payments processed
through Coinflip “Bitcoin ATMs” (defined below).
4. A cryptocurrency kiosk is a physical kiosk or automated machine that allows consumers
to insert physical cash to buy purely digital or virtual cryptocurrencies. CoinFlip runs a
type of cryptocurrency kiosk that it refers to as a Bitcoin ATM, or BTM. CoinFlip’s
BTMs—at issue in this Petition—allow consumers to buy various crypto currencies,
including Bitcoin. BTMs allow a consumer to insert cash into the machine, convert that
cash into Bitcoin, and then send that Bitcoin to a “digital wallet”—all for a fee(s).
5. Although CoinFlip states that it requires consumers to send Bitcoin they buy through a
BTM to a digital wallet owned by the consumer, CoinFlip regularly allows purchased
Bitcoin to be sent to a third party’s digital wallet.
6. CoinFlip profits from the fees it charges to buy Bitcoin and send it to someone else.
CoinFlip gets paid when a scammer tricks an Iowan into using a BTM to send Bitcoin.
Some scams that brutally victimize Iowans and send them to a BTM are: (i) romance
scams-- sending Bitcoin to a fake love interest met online, (ii) law enforcement scams—
sending Bitcoin to a fake sheriff or U.S. Marshal to avoid criminal charges or arrest, (iii)
refund scams—sending Bitcoin to return the fake overpayment of a refund from a large
company, or (iv) tech-virus scams—sending Bitcoin to save the consumer’s laptop from a
fake virus.
2
7. Scam calls and text messages targeting Iowans (and all Americans), particularly the
elderly, are on the rise. BTMs are one of the key tools used to scam Iowa consumers.
Each successful scam using a BTM is revenue for CoinFlip.
8. CoinFlip is the second largest BTM operator in the world. It has placed BTMs at around
54 Iowa locations. Its machines can be found in gas stations, grocery stores, and vape
shops. Based on the total amount of transactions at Iowa BTMs from January 1, 2021, to
June 10, 2024, CoinFlip is the largest BTM operator in Iowa.
9. CoinFlip knows scammers frequently send fraud victims to its BTMs, but it fails to take
meaningful action to protect Iowa consumers. That is because it is not in CoinFlip’s
economic interest to take meaningful actions to decrease fraudulent transactions. While
CoinFlip reaps profits from Iowa consumers who are the victims of fraud, Iowa
consumers are embarrassed and, even worse, face financial hardship, bankruptcy, social
isolation, stress or depression after being scammed into using BTMs. Consumers
overwhelmingly fail to receive any consumer or competitive benefit from BTMs.
10. CoinFlip’s business model is so co-dependent on the success of scammers that there may
be no way to operate a profitable BTM in Iowa that is not an unlawful act under Iowa’s
Consumer Fraud Act (“the Act”).
11. Offering Iowans an unsafe money transfer service through a physical machine located in
a gas station or vape shop to buy purely digital assets at unclear exchange rates and for
high fees is not innovative or beneficial to consumers. Instead, it is an unlawful, “unfair
practice” under the Act: “an act or practice which causes substantial, unavoidable injury
to consumers that is not outweighed by any consumer or competitive benefits which the
practice produces.” Iowa Code § 714.16(1)(i).
12. The Attorney General’s Office has reasonably found that scam transactions processed
through Iowa BTMs between January 1, 2021, to June 10, 2024, totaled at least
$13,182,625.
13. CoinFlip profited from those scam transactions. CoinFlip’s policies for use of its BTMs
do not adequately protect Iowa consumers or prevent scam transactions. CoinFlip also
fails to follow its own inadequate policies. The existing policies; lack of their
enforcement; and lack of additional, needed safeguards create an environment where the
3
“substantial unavoidable injury to consumers” far outweighs any “consumer or
competitive benefits” that BTMs offer (if any). Iowa Code § 714.16(2)(a).
14. CoinFlip’s business model also employs deceptive practices in its Bitcoin pricing. The
cost to purchase Bitcoin at a BTM is often much higher than the cost to purchase on a
cryptocurrency exchange, and CoinFlip does not want consumers to know the true cost.
CoinFlip hides the cost to BTM consumers in a way that has a “tendency or capacity to
mislead a substantial number of consumers as to a material fact or facts.” Iowa Code §
714.16(1)(c). CoinFlip’s flat fee of around $3.00 is relatively clear, but an additional
“Transaction Fee” (as described below) increases the total fee to Iowa consumers to an
additional amount in excess of 20% of the total transaction amount.
15. CoinFlip offers no refund policy related to scam transactions, further cementing
CoinFlip’s profits from Iowa scam victims and showing there is no release valve that
could undo a portion of the harm Iowa consumers face from CoinFlip’s unfair and
deceptive acts or practices.
16. After increased complaints from consumers and law enforcement regarding Iowa scam
victims who placed large sums of money into BTMs in the course of their victimization,
the Attorney General’s office initiated an investigation into the BTM operators in the
State, including CoinFlip.
17. At best, CoinFlip is a willfully blind participant in the victimization of hundreds of
Iowans. At worst, it is a silent partner to many scammers preying on Iowans, taking a cut
of each scam with its excessive and deceptive BTM fees that are further paired with a no
refund policy.
18. The State seeks a preliminary and permanent injunction under the Act to (i) enjoin
Defendant from engaging in the deceptive and unfair acts described in this Petition
whether that be by (a) a permanent ban from doing business in Iowa or (b) placing
additional safeguards and scam prevention requirements on the operation of BTMs in
Iowa; and (ii) impose all other injunctive relief the Court finds equitable.
19. The State also seeks civil penalties, reimbursement, disgorgement, and other costs and
fees permitted by the Act given CoinFlip’s deceptive and unfair conduct, which has
harmed and continues to harm Iowa consumers.
4
I. Jurisdiction
20. This Court has jurisdiction over this matter under Iowa Code § 714.16(7).
21. This Court has jurisdiction over the Defendant under Iowa Code § 714.16 because the
Defendant has transacted business within the state of Iowa at all times relevant to this
complaint.
22. Polk County is the proper venue under Iowa Code § 714.16(10) because Defendant
transacts business in Polk County through numerous physical BTM locations in Polk
County. Additionally, transactions upon which this action is based occurred in and some
victims reside in Polk County.
II. Parties
23. Plaintiff is the State of Iowa, ex rel. Brenna Bird, Attorney General of Iowa. Under Iowa
Code § 714.16(7), the Attorney General may seek civil enforcement of the Iowa
Consumer Fraud Act.,
24. Defendant GPD HOLDINGS LLC (d/b/a CoinFlip, Inc.) is a Delaware corporation with
its principal place of business in Illinois and its executive offices located at 433 W. VAN
BUREN STREET, SUITE 1050N, CHICAGO, IL, 6060. GPD HOLDINGS LLC is
registered with the Iowa Secretary of State to do business in the State of Iowa under
business number 638151. The company lists its registered agent as “UNITED AGENT
GROUP INC.” located at 3106 INGERSOLL AVENUE Des Moines, IA 50312.
25. At all relevant times, CoinFlip transacted business in Iowa by marketing, promoting,
advertising, offering its services/products for sale which include allowing consumers
access to its BTMs to purchase Bitcoin.
III. Factual Allegations
26. CoinFlip advertises itself as the owner of one of the largest BTM networks worldwide.
CoinFlip claims that it operates a network of over 5,500 BTMs around the US and several
other countries. About Us, CoinFlip, 2022, available at https://coinflip.tech/about (last
visited Feb. 17, 2025). From January 1, 2021, to June 10, 2024, the company operated
approximately 54 BTMs in Iowa.
27. CoinFlip uses retail partnership contracts to place its BTMs in convenience stores,
grocery stores, liquor stores, vape shops, and gas stations.
5
28. CoinFlip reports it has conducted at least $4 billion in transactions since the company’s
inception with more than 500,000 customers. Id.
29. From January 1, 2021, to June 10, 2024, CoinFlip processed more than
transactions, totaling more than in the state of Iowa. Over $13 million in
transactions processed through a CoinFlip BTM have been identified as a scam
transaction. The Attorney General has spoken to or analyzed data related to the top 20
users of CoinFlip’s BTMs in Iowa (based on total BTM deposits during the time period).
The transactions of all 20 users occurred because of a scam. These individuals alone
represent over $7.3 million in transactions.
30. The Attorney General’s office reasonably believes the number of scam transactions will
only grow as more consumers are contacted.
31. Also, based on an analysis of data provided from CoinFlip and other data related to
Bitcoin addresses and digital wallets, the Attorney General’s office has reason to believe
that at least of CoinFlip’s transactions are either fraudulent, sent from
accounts that were later banned, or were sent to addresses later blacklisted (meaning
flagged for fraud) by the company itself.
A. BTMs and Scams Go Hand-in-Hand
32. Cryptocurrency surged as a payment method for scams in recent years because it is
portable and difficult to trace.
33. Widespread access to cryptocurrency kiosks including BTMs helps make this possible.
Reported losses using cryptocurrency kiosks are overwhelmingly related to government
impersonation, business impersonation, and tech-support scams. ”New FTC Data Shows
Massive Increase in Losses to Bitcoin ATM Scams.” Federal Trade Commission, 3 Sept.
2024, www.ftc.gov/news-events/news/press-releases/2024/09/new-ftc-data-shows-massive-
increase-losses-bitcoin-atm-scams.
34. Since most fraud is not reported, these numbers likely represent only a fraction of the
actual harm. One study showed only 4.8% of people who experienced mass-market
consumer fraud complained to a Better Business Bureau or a government entity.
Anderson, Keith B. “To Whom Do Victims of Mass-Market Consumer Fraud
Complain?” SSRN Electronic Journal, 2021, https://doi.org/10.2139/ssrn.3852323.
6
35. The Federal Trade Commission estimates that fraud losses at cryptocurrency kiosks have
skyrocketed, increasing nearly tenfold from $12 million in 2020 to $114 million in 2023
and topping $65 million in the first half of 2024. Emma Fletcher, Bitcoin ATMs: A
payment portal for scammers, FTC (Sept. 3, 2024), https://www.ftc.gov/news-
events/data-visualizations/data-spotlight/2024/09/bitcoin-atms-payment-portal-scammers.
36. In the first six months of 2024, the median reported loss was $10,000 when using
cryptocurrency kiosks, $5,400 when cryptocurrency was the reported payment method
(including reports with and without using cryptocurrency kiosks), and $447 in general
fraud cases. FTC data shows that older adults are less likely to report fraud than younger
adults and have even higher individual median dollar losses. Protecting Older Consumers
2023-2024, A Report of the Federal Trade Commission at 17 (Oct. 18, 2024),
https://www.ftc.gov/system/files/ftc_gov/pdf/federal-trade-commission-protecting-older-
adults-report_102024.pdf. This is significant; as noted below, most Iowans using BTMs
are age 60 or older.
37. The following chart, created by the FBI’s Internet Crim Complaint Center, shows
reported scams and losses increase with age.
“2023 Cryptocurrency Fraud Report Contents,” Internet Crime Complaint Center,
available at https://www.ic3.gov/annualreport/reports/2023_ic3cryptocurrencyreport.pdf
38. Similarly, CoinFlip’s transaction amounts increase by age as shown by the following
chart that provides an overlay of what Iowa BTM transactions and IC3’s Reported Losses
to Fraud look like when broken into the IC3 chart’s age brackets. As the chart shows, the
trends for IC3 scam victims and Iowa BTM users closely and sadly align.
7
44. The following graphic sums up CoinFlip’s position that its BTMs are safe and even goes
a step further to state that CoinFlip’s scam education at its machines “empower users to
make informed decisions.”
App. 4.
45. CoinFlip knows that many of the transactions it is asked to process are coerced or
unwilling transactions initiated by or at the behest of scammers. CoinFlip’s training and
compliance documents speak at length about the dangers of money transfers, the
prevalence of scams, and the various ways to identify potential scams.
46. Despite CoinFlip’s public-facing statements about its concern for fraud or scams, reality
paints a different picture.
47. Transactions where an individual sends money to a digital wallet that a different
consumer has already sent money to are processed regularly, despite CoinFlip stating the
wallet must be controlled by the person sending the money.
48. CoinFlip’s records also show that from January 1, 2021, to June 10, 2024, $16,531,995
was transferred by Iowa BTM users who were later banned by the service. Many of these
individuals simply created new accounts and continued using the service.
49. $12,955,025 was transferred by Coinflip during January 1, 2021, to June 10, 2024, to
digital wallets that CoinFlip later placed on a blacklist. Coinflip’s general operating
9
procedure for when an individual attempts to send money to blacklisted wallets is to
simply ask them to use a different wallet.
50. CoinFlip’s records include many other obvious warning signs of fraud, including:
a. CoinFlip’s consumer base is overwhelmingly older. CoinFlip acknowledges in its
training documents that, “one of the fastest-growing forms of fraud is elder financial
exploitation.” The document continues, stating, “people who are manipulated in this
way often don’t realize that they are victims.” Despite this awareness and even
though a large percentage of its Iowa BTM revenue comes from Iowans aged 60 or
older, CoinFlip has failed to implement adequate policies to protect this vulnerable
population. Whether intended or not, CoinFlip’s typical user in Iowa is an older
Iowan and a scam victim.
b. Many CoinFlip users have multiple accounts. CoinFlip knows that at least 311 Iowa
BTM users with the same first and last name have at least two accounts. Most of
these people have indicators that would suggest they are the same person (for
example the same home address). One Iowa user has what appears to be 21 different
distinct customer IDs. Coinflip records show that Iowa user used the same Coinflip
machine (located in Des Moines) 21 times on 2 different days. Each transaction,
occurring minutes apart, was for $900. Due to CoinFlip’s poor screening, the user
placed a total of $18,760 into a CoinFlip machine without ever triggering any higher
review, or even the requirement to provide a government ID.
CoinFlip claims to apply heightened scrutiny to accounts over lifetime usage
and must under the law make reports for unusual and/or suspicious activities
involving transactions over certain amounts. Allowing a user to deceptively open
multiple accounts enables him or her to evade such scrutiny.
c. Multiple CoinFlip users sent money to the same Bitcoin address. A Bitcoin address is
a string of letters and numbers that functions like an email address. Bitcoin can be
sent to that specific string of letters and numbers and the user at the other end can
receive Bitcoin at that address. Like an email address, anyone who knows the address
can send Bitcoin to that address. CoinFlip makes users verify that they own and
control the Bitcoin address to which they send money. Every user must affirm the
following: “I attest that I am sending my funds to a wallet I own or directly have
10
control over.” The reason for this is because unlike cash in a bank account, a person
holds the keys to where his or her Bitcoin is held. It is virtually impossible for
someone else to access a Bitcoin wallet unless they have the wallet’s credentials.
Once Bitcoin is given over to someone it is very hard to take it back.
Nevertheless, CoinFlip routinely ignores the red flags it has identified to
consumers and transfers money to addresses that (i) multiple users have claimed to
“own” and (ii) CoinFlip’s own data shows is claimed by multiple users and thus
likely fraudulent.
From January 1, 2021, to June 10, 2024, Coinflip sent money from 10 distinct
users to the same two Bitcoin addresses. The first address had 45 associated
transactions from different users of $900 each transaction, for a total of $40,489. The
second address had 51 associated transactions from different users of $900 each, for a
total of $45,860. Data related to each address shows that the money was quickly
transferred out of the wallet each time. Despite these clear violations of CoinFlip’s
user agreements and red flags for fraud, all 10 users were never flagged or banned
from using CoinFlip services. All but one of the users was never required to enter a
date of birth. Rather than notify the users, freeze the accounts, blacklist the wallets, or
take any action to protect Iowans, the company continued to process the transactions
making over $7,000 in fees to look the other way.
In data provided to the Attorney General’s office, there are 586 Bitcoin
addresses which had more than one distinct Iowa BTM user sending money to the
address. If Iowa transactions were cross-referenced against CoinFlip’s data from
around the country that number will almost certainly increase. This is because the
data examined by the Iowa Attorney General’s office includes transactions occurring
in Iowa at BTMs. It doesn’t include the data CoinFlip has from its online sales, app
sales, or from the other 5,500 or so BTMs not located in Iowa.
d. Users have a large amount of Bitcoin addresses and are connected to multiple
wallets. A Bitcoin address can be thought of as an account holding all Bitcoin sent to
it. Each Bitcoin address is associated with a digital wallet. The owner of the digital
wallet is the owner of each Bitcoin address associated with that wallet. Of the more
than 4,206 distinct user IDs who used CoinFlip’s machines in Iowa from January 1,
11
2021, to June 10, 2024, approximately 2,025 of those Iowa consumers used more than
one Bitcoin address, with 513 using 10 addresses or more. For example, one Iowa
user and confirmed scam victim (age 74), was eventually blacklisted by CoinFlip, but
not before he sent $291,075 on a CoinFlip BTM using 205 distinct addresses.
One reason for a person to have so many wallets is to ensure that if law
enforcement finds or shuts one down, that the damage is limited. Or, if a company
actually performing consumer protection duties flagged a wallet as likely belonging
to a scammer, having more than 80 alternative wallets could be one way to skirt
enforcement. For CoinFlip, a company by its own admission which typically serves
less sophisticated users of cryptocurrency, older users depositing their money into
numerous addresses linked to multiple wallets at CoinFlip BTMs should trigger
further investigation by CoinFlip.
e. CoinFlip allows users who are under 18 years old to use its services, despite its
Terms of Service. From January 1, 2021, to June 10, 2024, CoinFlip processed 36
transactions for Iowa BTM users who identified themselves as under 18. There is an
additional $3,373,000 in transactions where CoinFlip did not require the user to
provide a date of birth at all. It is clear that this is a feature of the service, and not a
bug. In an interview, (then) Head of Business Development at Coinflip, Dustin Wei
stated, “I got into crypto and ATM’s specifically, because as someone who was under
18, it’s kind of hard to buy crypto because I don’t have a bank account, and when I
did, they actually banned me because I was buying crypto with my bank account. So,
my only resort was bitcoin ATMs. [CEO Daniel Polotsky interjects] “Was Coinflip”
[Wei] Yeah exactly, was Coinflip.” Crypto Campfire Podcast, Crypto ATMs vs. Face-
To-Face Bitcoin Trading, Finance Regulation, & 7-Toed Cats W/ CoinFlip ATMs,
YouTube, 1 Sept. 2019, www.youtube.com/watch?v=dcz3hrlqYps. This shows that
CoinFlip is asleep at the wheel and not looking to enforce the policies in its Terms of
Service including scam prevention.
C. CoinFlip’s Policies Are Insufficient to Address the Known Issues Related to
Scams
51. CoinFlip has several policies and programs related to fraud including, but not limited to,
its “Compliance Program,” its “Know Your Customer Policy,” and its “Enhanced Due
12
Diligence Policy.” These programs fail to adequately and effectively detect and prevent
consumer fraud and scam transactions processed through CoinFlip’s Iowa BTMs.
52. In addition to its anti-fraud program, CoinFlip is required by the Bank Secrecy Act to
have an effective anti-money laundering (“AML”) program to prevent money laundering.
31 C.F.R. § 1022.210. That prevention responsibility includes, but is not limited to, the
flow of illicit funds, such as funds derived from fraud. As part of its AML program,
CoinFlip has developed “Know Your Customer” guidelines and policies along with
policies and procedures for monitoring transactions, customers, and agent activity for
risks, including suspicious activity.
53. AML legal requirements are distinct from compliance responsibilities under the Act. But
all policies implemented under the umbrella of AML have failed in preventing CoinFlip’s
business acts and practice from causing “substantial, unavoidable injury” to Iowa
consumers. Iowa Code §714.16(1)(i). Those policies are either inadequate or ineffective
due to CoinFlip’s failure to enforce and follow the policies. Either way, CoinFlip’s
money-transfer system is an unfair or deceptive act or practice that is unlawful under the
Act.
54. CoinFlip’s primary training documents for employees outline its approach to scams. In its
training on
55. However, CoinFlip’s practices make it clear that CoinFlip’s goal is not to stop or
interrupt scams, unless and until the scam victim admits to CoinFlip that he or she is in
fact the victim of a scam (and it may take multiple admissions). If an individual does not
admit so, CoinFlip’s policy appears to be to disclaim and warn the user but to allow
future transactions. Warnings are frequently given to consumers who are caught sharing
accounts, using multiple accounts, and using wallets known to belong to third parties.
56. For example, CoinFlip’s training document provides:
13
App. 78.
57. Even when an Iowa user is “banned” from using CoinFlip, he or she need only provide a
new telephone, and even if he or she uses the same home address and date of birth, the
user will be allowed to continue his or her use of CoinFlip’s services.
58. Further, CoinFlip is more interested in protecting itself (and its bottom line) than
protecting Iowa consumers and preventing scams.
59. Rather than take a protective and proactive approach to preventing prevalent scam
transactions across Iowa BTMs, CoinFlip chooses to simply show a vague warning to
victims and make clear to them that there will be no recourse or refund for them when
they eventually realize that they are another Iowa scam victim that used a CoinFlip BTM.
Id.
D. CoinFlip’s Warnings Are Ineffective at Preventing Scam Transactions
60. CoinFlip’s primary method of preventing scam victims from using a BTM is to place
onscreen warnings and sticker warnings on the machine. Below are examples of the
warnings:
14
15
61. These warnings are insufficient to protect Iowa scam victims and CoinFlip knows it.
CoinFlip only needs to look at its data as the proof is in the pudding. A review of the best
studies on warnings, shows that scammers disrupt a person’s ability to reason and in the
moment warnings often fail. A Review of Scam Prevention Messaging Research, Federal
Trade Commission, available at:
https://consumer.ftc.gov/system/files/consumer_ftc_gov/pdf/A%20Review%20of%20Sca
m%20Prevention%20Messaging%20Research.pdf. The sheer volume of transactions
confirmed as scams to date show this method is ineffective. CoinFlip does not often call
to speak with its customers to prevent a scam even in most scenarios raising a red flag.
Something as easy as a call could make a major difference as noted by a scam victim in a
recent news story who (i) said it was possible there was a warning on the machine he
skipped passed, and (ii) went on to state “If somebody called me and said, ‘Wait a
second, what are you doing? Why are you putting in so much money, and do you have
more money you’re going to put in?’ that would have saved me. . . .” “To fight scams,
Senate bill would limit transactions at crypto ATMs,” available at,
https://www.nbcnews.com/news/us-news/senate-crypto-atm-bitcoin-scam-rcna193495
(last accessed February 25, 2025).
16
E. The Demographic Markets in Iowa for Scam Victims and BTMs Are Older
Iowans
62. CoinFlip competes with online exchanges, which sell consumers Bitcoin at a significantly
lower net cost than CoinFlip BTMs. CoinFlip targets less sophisticated users who prefer
to use cash. It often describes its target audience as the unbanked or underbanked.
63. Then Chief Operating Officer and Current CEO and cofounder of the company, Ben
Weiss, described the target audience as follows:
“There was this issue of how hard it is to get bitcoin, especially if you
don’t have a bank account, or if you’re unbanked or if you just want to
buy fifty dollars, a hundred dollars. So, we saw the need for the ATMs and
we saw all these unbanked and underbanked communities who were kind
of being left out of this financial revolution that was supposed to be a
democratizing force, so that’s why we went the ATM route instead of the
exchange route.” Crypto Coin Show, Blockchain Interviews - Ben Weiss,
COO of CoinFlip Bitcoin ATMs,” YouTube, 13 Oct. 2020,
www.youtube.com/watch?v=iBORlRY6sm4.
64. In the same interview, he states, “A lot of these people who are going to the
ATMs are beginning investors, they want to get into bitcoin, but you know they
need more support, more customer service than someone who’s been doing this
for five or six years.” Id.
65. Mr. Weiss has also stated, “We wanted to make it for the average consumer. Like my
mom, she writes checks. She goes into bank branches. We didn’t see any equivalent of
that for cryptocurrency.” Fintech Nexus, “Podcast #77: Ben Weiss of Coinflip.”
YouTube, 25 Jan. 2023, www.youtube.com/watch?v=HyCNY6rv02Q.
66. Cofounder and (at the time CEO) Daniel Polotsky stated, “I would say a plurality of
people, like 40 to 50 % are just buying and holding. And not doing anything, just
speculating on the price, and using it as their bank, which I think is cool.” Polotsky
explained “I don’t think bitcoin is ready to be spent on low ticket items because the price
is too volatile.... It’s a little too volatile.”
67. Polotsky also stated, “I think right now, that people definitely do use bitcoin to buy
things, but it’s more like high ticket items like Ferraris or Lambos or houses, you know,
it’s not like for a bag of chips.”
17
68. However, the data from CoinFlip tells a starkly different story:
a. Its business model depends on a small number of high-volume users;
b. Its primary audience is, in fact, older individuals with large sums of assets who bank;
and
c. Most of its largest customers (by total transaction amount) use dozens of bitcoin
addresses and wallets, often quickly transferring the money out of the wallets into a
wide variety of foreign based exchanges.
69. The top 20 percent of Iowa users by total transaction(s) size accounted for of all
money processed through CoinFlip’s Iowa BTMs from January 1, 2021, to June 10,
2024. The bottom 60% of Iowa users account for 15% of all money put into CoinFlip’s
BTMs.
70. The chart below was created using CoinFlip’s data provided to the Attorney General’s
office. It shows a breakdown of CoinFlip’s Iowa users from January 1, 2021, to June 10,
2024, by age. Approximately 43% of its users in Iowa are 60 years old or older.
71. The targeting of older Iowans becomes even more evident when shown as the total
amount of money placed into CoinFlip’s Iowa BTMs between from January 1, 2021, to
June 10, 2024, based upon the age of the customer, as shown below:
18
72. Older Iowans use BTMs the most. Though Iowans who are 60 years old or older
represent 43% of users, 58% of the money CoinFlip took from Iowans from January 1,
2021, to June 10, 2024, came from individuals in this group. 62-year-olds put the most
money into Iowa Coinflip BTMs, accounting for approximately . The average
age of CoinFlip’s top twenty users in Iowa is 67.4 years old. 78-year-olds were the age
group with the highest average amount per customer of approximately .
73. CoinFlip and scammers are both profiting from older Iowans.
F. CoinFlip’s Profitability in Iowa Depends on Iowa Scam Victims
74. CoinFlip could do more to prevent scam transactions, but such policies would reduce its
profits:
a. CoinFlip Underutilizes Bitcoin Tracking Capabilities. Inherent in Bitcoin is the
ability to track Bitcoin transactions, as every transaction is recorded in the currency.
CoinFlip has access to Elliptic software, which traces Bitcoin transactions. Elliptic
uses a mix of proprietary and publicly available tools to follow the money. CoinFlip
could use Elliptic to identify and stop scams faster and at a higher rate. But rather
than stopping suspicious transactions, employing blockchain analytics software to
analyze transaction patterns, or questioning users, CoinFlip collected fees.
CoinFlip’s internal data provides examples of how easily it could detect and
stop scams, even using publicly searchable digital wallet databases instead of the
19
expensive software CoinFlip already has. The Attorney General’s office has
employed similar software on many of CoinFlip’s largest customers and identified
many clear indicators of fraud. For example, one older Iowan interviewed by the
Attorney General’s office claimed he was not a victim of fraud. He claimed that he
put $151,000 into a CoinFlip BTM to help fund orphanages in Africa. The Attorney
General’s office analyzed the five Bitcoin addresses he sent the most money to and
found the addresses were tied to a porn site, an online gambling site, and Russian and
Iranian based fraud shops. When the Attorney General approached the elderly man
with this information, he admitted he was in a romance scam and was too ashamed to
initially tell the truth.
b. CoinFlip Fails to Use its Machine’s Surveillance Abilities. Each BTM has an
internet-connected video camera that can be accessed by CoinFlip remotely. Its
policies allow CoinFlip’s compliance teams to monitor transactions and prevent
people who are posing as others or using multiple aliases from using the machine.
Many fraudsters maintain continuous phone contact with their victims so
that they can keep them in a state of emotional distress. Few willing users attempt to
use a BTM while on the phone, as entering information and placing physical bills into
the machine generally requires two hands and the machine sends a text message as
part of the transaction. CoinFlip could monitor Iowa consumers to identify clear red
flags – such as being on the phone while using the machine – and further verify the
transaction is legitimate in those circumstances.
c. CoinFlip Provides No Training to Its Store Locations on How to Spot Scams. Store
clerks could be a key line of defense against fraud. The Attorney General’s office
spoke with a store clerk who said she often sees older people attempting to use the
BTM located in her store. When she sees an older person with a stack of $100 bills
come in and he or she is on the phone or looks scared, she will speak to the individual
and convince them that he or she is being scammed.
Yet, CoinFlip’s lease agreements with these stores show that their focus is
on making sure the stores protect CoinFlip’s BTMs, not its customers. The contracts
come with many requirements to make sure the BTM is available to consumers and
none requiring the store to assist Coinflip in identifying scam victims. CoinFlip does
20
not appear to warn these locations of the danger that its machines are utilized in fraud
or provide any training documents for the stores to be better equipped to help
CoinFlip protect its consumers. Though CoinFlip doesn’t help the stores protect its
consumers from fraud, CoinFlip is quick to use its agreement to protect itself from
liability for such fraud. The lease agreement attempts to protect CoinFlip from
liability to the stores in the event of theft, vandalism, criminal acts, or a host of other
eventualities.
G. CoinFlip Profits From Iowa Scam Victims
75. From January 1, 2021, to June 10, 2024, CoinFlip retained 10.86% of all money
processed through its machines in Iowa. In total CoinFlip made more than $5.4 million
from Iowans, with millions of that money likely coming directly from scam victims.
76. So far, the Attorney General’s office has reviewed data for CoinFlip’s self-identified
scam victims and contacted CoinFlip’s Iowa BTM users. Of hundreds of people
contacted, approximately 90% reported they were victims of a scam. All 20 of CoinFlip’s
top 20 users of Iowa BTMs by total transaction(s) size for January 1, 2021, to June 10,
2024, have been confirmed by the Attorney General’s office to be scam victims.
77. Currently the total transaction value of confirmed scam transactions in Iowa from January
1, 2021, to June 10, 2024, is $13,182,625.
78. The Attorney General’s office reasonably believes this amount to rise significantly as
more individuals are contacted and further forensic analysis is completed.
79. CoinFlip started as a business that attempted to compete on price. One of the inspirations
for starting the company was that competitors charged such excessively high fees.
Talking about his first time using a bitcoin ATM prior to starting the business, CoinFlip
CEO Daniel Polotsky said “I went to the first ever bitcoin atm. The fees were crazy, it
was probably like 12 percent.” Funky Crypto Podcast, 39: Daniel Polotsky CEO and
Founder of the Fastest Growing Crypto ATM Company Coinflip ATM., Sep. 17, 2020.
https://open.spotify.com/episode/5AWInN4d5eRO3WERNBNJ3p.
80. Most businesses as they mature and are faced with competition must respond with lower
prices. CoinFlip has more than doubled its rates (raising it six times) in the last 4 years
without meaningfully changing the services offered at its BTMs.
21
81. CoinFlip’s combined fees to purchase Bitcoin through its machines is currently up to
21.90%, more than triple what the fees were when CoinFlip was a startup company.
82. At the same time, it has never been easier to buy Bitcoin elsewhere. Direct competitors
have dramatically expanded their footprints (Bitcoin Depot, Athena, and RockitCoin to
name a few), online crypto exchanges (Coinbase, Kraken, Binance) have improved their
services, popular investment platforms (Fidelity, Charles Schwab, Robinhood) have
added the ability to buy cryptocurrency, and payment apps (CashApp, Venmo, and
PayPal) have added options to buy and sell crypto.
83. Current CEO and cofounder of the CoinFlip, Ben Weiss, explains CoinFlip’s growth and
competitive advantage to charge high fees are a result of: “The ethos of being there for
the customer every step of the way no matter how much or how little they know about
crypto and about technology, and having our 24/7 customer support, I think it’s that
unique white glove service that we offer that has allowed us to continue to grow
throughout these years.” Fintech Nexus. “Podcast #77: Ben Weiss of Coinflip.” YouTube,
25 Jan. 2023, www.youtube.com/watch?v=HyCNY6rv02Q.
84. However, CoinFlip’s own internal data makes it clear that its “competitive advantage” is
its symbiotic relationship with scammers. The scammers manipulate unwitting Iowans
into using CoinFlip’s BTMs, unaware that they are being scammed and unaware they are
being charged exorbitant rates. The scammers get the lion’s share of an Iowa victim’s
money. CoinFlip, acting as the getaway vehicle, retains an ever-increasing percentage of
the stolen money.
H. CoinFlip Hides the True Cost of Using a BTM From Iowa Consumers
85. CoinFlip engages in deceptive practices to conceal what it really charges an Iowa
consumer to buy Bitcoin, including by:
a. Combining all three of its online, app, and kiosk services in its Terms of Service
document presented to BTM users, so BTM users find it harder to determine which
sections apply to them.
b. Calling the product a “Bitcoin ATM” and charging a “flat fee” around $3, which
confuses Iowans into thinking they are paying only around $3.
c. Burying any explanation of the total actual fees (currently up to 21.90%) in the Terms
of Service.
22
d. Displaying information on screens and receipts in a way that increases the likelihood
a consumer will not learn the true cost of the service.
86. Many Iowa consumers we interviewed were unaware of the amount of money they were
charged to use the CoinFlip machines or under the impression that they paid a small
service fee similar to a traditional bank ATM. CoinFlip encourages this belief by hiding
the fees in an ambiguous “Transaction Fee” that is buried in its complex Terms of
Service. However, CoinFlip makes sure to clearly highlight it’s small “flat fee.”
87. The cost of a product or service is a material term to a transaction. CoinFlip hides that
material term related to its BTMs transactions in fine print that is confusing and designed
to go unnoticed by Iowa consumers. CoinFlip interacts with Iowa consumers in three
ways: at a BTM, online, and through its app. CoinFlip’s Terms of Service are different
for each service, but rather than have separate terms of service for each, CoinFlip
combines all three into one document. This forces consumers to scan an array of terms in
an attempt to understand which may apply to their transaction.
88. Pew Research estimates that 22% of Americans either always or often read terms of
service. 36% say they never read the terms of service. Auxier, Brooke, et al. “Americans’
Attitudes and Experiences with Privacy Policies and Laws.” Pew Research Center:
Internet, Science & Tech, Pew Research Center: Internet, Science & Tech, 15 Nov. 2019,
www.pewresearch.org/internet/2019/11/15/americans-attitudes-and-experiences-with-
privacy-policies-and-laws/.
89. CoinFlip has the capability, if it wants, to track the time a person spends on screen and
can monitor the person in real time using a camera on the machine, if desired. It knows
that the vast majority of CoinFlip customers are not reading the Terms of Service to learn
of the true fee structure. CoinFlip counts on consumers assuming the machine is like
most traditional bank ATMs and that the fee to purchase Bitcoin at an Iowa BTM is the
prominently displayed “flat fee.”
90. It is useful to view what a CoinFlip transaction looks like to an Iowa consumer. The
following images were taken by the Attorney General’s office at a CoinFlip BTM.
91. After the BTM asks an Iowan to select a “Crypto Currency,” it shows the user the
following screen, which includes an obscured “View Terms and Conditions” button.
23
92. If the Iowa user clicks the partially obscured button, he or she can then scroll through the
lengthy Terms of Service viewed through a narrow portion of the overall screen to learn
the details of the fee schedule.
93. Assuming an Iowan clicked on the “View Terms and Conditions” button, he or she would
need to scroll to page 9 of 33 to locate the appropriate fee language. The Terms of Service
include three different Fee schedules: “Fees at Kiosks and Cashiers,” “Fees for Coinflip
Preferred Order Desk,” “Fees in the App.” There is then a paragraph that is titled “Market
Price” that presumably applies to all three of the different Fee schedules included. The Fee
and Market Price sections are as follows:
Fees
Fees at Kiosks and Cashiers
You agree that by transacting at a Kiosk the Company may charge, and You will
pay, a Transaction Fee and a Network Fee for each transaction You make. The
Transaction Fee is calculated as a percentage of Your total transaction amount and
ranges from 4.99% to 21.90% of the total transaction amount. The Network Fee is
a fixed fee that does not depend on the size of Your transaction. The Transaction
Fee and Network Fee are included in the exchange rate applicable to Your
transaction. Before You make a transaction, we will tell You the exchange rate
applicable to Your transaction. By proceeding with the transaction, You agree to
24
pay the exchange rate, including the Transaction Fee and Network Fee, and You
agree to the other terms applicable to the transaction as set forth in these Terms. If
You do not agree, You may not proceed with the transaction and must immediately
discontinue Your use of the Services for that transaction.
The Transaction Fee is calculated as a percentage over the Market Price, as
discussed fully in the paragraph above. The Transaction Fee and Network Fee are
included in the exchange rate applicable to Your transaction. Before You make a
transaction, we will tell You the exchange rate applicable to Your transaction. In
other words, the Company will tell You: (1) the amount You must pay in fiat
currency to purchase a certain amount of cryptocurrency from the Company or (2)
the amount the Company will pay You in fiat currency to purchase a certain amount
of cryptocurrency from You. By proceeding with the transaction, You agree to pay
the exchange rate, including the Transaction Fee and Network Fee, and You agree
to the other terms applicable to the transaction as set forth in these Terms of
Service. If You do not agree, You may not proceed with the transaction and must
immediately discontinue Your use of the Services for that transaction.
Fees for Coinflip Preferred Order Desk
You agree that CoinFlip Preferred may charge, and you will pay between 0.50% to
9.99% over the Market Price for purchases and be paid approximately 0.50% to
9.99% under the Market Price for sales of cryptocurrency (the “Transaction
Fees”). The Transaction Fee and Network Fee are included in the exchange rate
applicable to your transaction. Before you make a transaction, we will tell you the
exchange rate applicable to your transaction. In other words, CoinFlip Preferred
will tell you: (1) the amount you must pay in fiat currency to purchase a certain
amount of cryptocurrency from CoinFlip Preferred or (2) the amount CoinFlip
Preferred will pay you in fiat currency to purchase a certain amount of
cryptocurrency from you. By proceeding with the transaction, you agree to pay the
exchange rate, including the Transaction Fee, and you agree to the other terms
applicable to the transaction as set forth in these Terms of Service. If you do not
agree, you may not proceed with the transaction and must immediately discontinue
your use of the CoinFlip Preferred service for that transaction. By completing your
25
transaction, you acknowledge that you have been presented the exchange rate
applicable to your transaction and have agreed to it, including the Transaction
Fee.
Fees in the App
For purchases in the App, You will be required to pay a Processing Fee, a
Transaction Fee, and a Network Fee. The Processing Fee is calculated as a
percentage over the Market Price, as discussed fully below. The Processing Fee
will be different based on whether You complete a transaction using debit, credit,
or ACH. Before You make a transaction, we will tell You the exchange rate
applicable to Your transaction and all applicable fees, including the Processing
Fee, Transaction Fee, and Network Fee. By proceeding with the transaction, You
agree to pay the exchange rate, including the Transaction Fee, Processing Fee,
and Network Fee, and You agree to the other terms applicable to the transaction
as set forth in these Terms of Service. If You do not agree, You may not proceed
with the transaction and must immediately discontinue Your use of the Services for
that transaction.
Market Price
The Company uses CoinAPI indexing to determine the Market Price. The Company
reserves the right to use a different source without notice to determine Market Price
for any reason. By transacting with the Company, You waive any claims or liability
against the Company based on the manner in which the Company determines the
Market Price.The Company also charges a minimum $2.49 Network Fee.
“Network Fee” shall mean the minimum $2.49 fee applied towards the required
payment to use the applicable blockchain to send Your selected cryptocurrency to
Your cryptocurrency wallet. Due to the nature of how the Company processes
customer transactions, the Company may periodically profit from the Network Fee.
During times of high transaction volume, the Network Fee may be increased. By
transacting with the Company, You waive any claims or liability against the
Company based on the charged Network Fee.” App. 113-114.
94. It is not easy for an Iowan consumer to decipher the cost of purchasing Bitcoin through a
CoinFlip BTM.
26
95. The next screen (below) shows more signs of confusing Iowa consumers. It has a lengthy
“Customer Notice,” along with options to view “Terms,” “Privacy Policy,” and “Privacy
Notice.” The button to continue is bright green and placed in a position most likely to be
pushed.
96. Next is the “Scam Disclaimer” screen (included earlier in this Petition) followed by a
screen that asks the Iowa consumer how much Bitcoin he or she would like to purchase.
The screen (below) notably tells the consumer that “the exchange rates include all fees
before network fees.” It is unclear what exchange rates this refers to or why the word
27
“rates” is pluralized.
97. The Iowa user must then enter his or her “mobile number,” a one-time SMS passcode the
machine sends to the number, and the Iowan’s name and a date of birth.
98. Iowans are then shown the following screen which again gives the user the option
between scrolling through dense language or clicking a bright green button:
28
99. If the consumer were to scroll down, the Iowan would find something like the following:
“All capitalized terms used herein without definition shall have the meanings assigned to
them in the Terms of Service. The Effective Rate is calculated as a percentage over the
Market Price. The Total Transaction Fee is the difference between the Market Rate and
the Effective Rate, plus the Network Fee. Our current fee schedule for the selected crypto
currency is as follows – Effective Rate 86787.0 USD, Market Rate 70,386.9 USD, and an
additional Network Fee of 2.99 USD.” The below photo is from CoinFlip’s
documentation submitted to the Attorney General’s office.
100. Assuming the consumer scrolled through and understood the complex information, the
consumer now has all of the variables needed to complete the Algebraic equation to
calculate the fees to purchase Bitcoin.
101. To calculate the fees, an Iowan consumer must take the money to be inserted into the
BTM (in this example $20) and subtract the $2.99 network fee (to get 17.01). The
consumer then needs to divide the market rate of bitcoin (70,386.9) by the effective rate
that Coinflip is charging 86,787 (which is 0.81103). Lastly, the Iowan needs to multiply
$17.01 by 0.81103 to learn that Coinflip will be sending $13.80 in Bitcoin to an address
and retaining $6.20 for themselves in fees.
29
102. The next screen prompts the user to scan in a Bitcoin address using a QR code scanner.
After the address is inputed, the consumer is prompted to enter money into the machine.
103. The top of the screen reads 1BTC=120461.39 USD +2.99 Flat Fee. The term “Flat Fee”
is not found anywhere in the Terms and Conditions or any other disclosure.
104. Presumably, CoinFlip is referring to the “Network Fee.” However, by using the phrase
“Flat Fee,” an Iowan could easily believe he or she is being charged only $2.99 as a flat
fee to use a CoinFlip BTM.
105. So not only is the calculation to determine the fees of Bitcoin at a Coinflip BTM
deceptive by virtue of being hidden and subject to a string of complex math formualas,
CoinFlip uses the phrase “flat fee” to further hide the cost.
106. The consumer is then asked to opt in to marketing updates and offered the opportunity to
read yet another legal document (the “SMS terms and conditions”).
30
107. Finally, an Iowa user sees a screen showing a total transaction where $20.00 was
translated into .00014125 of bitcoin.
108. A text “Receipt” is sent to the user’s phone. The receipt does not contain any information
regarding the fees paid by the consumer. (See below).
31
109. Coinflip’s user interface is designed to make reading the Terms of Service tedious and
difficult, while simultaneously making it easy and intuitive for the consumer to skip the
terms entirely.
110. CoinFlip’s leadership acknowledges that many of its customers are not sophisticated
when it comes to their understanding of Bitcoin, and yet it hides material details of the
transaction among legal jargon and behind partially obscured buttons.
111. CoinFlip could easily express the full cost of its service as a US dollar amount on the
screen and receipt, as many of its competitors do, but it doesn’t because doing so would
alert the consumer to the high cost of the service and make them less likely to use
CoinFlip’s service.
112. CoinFlip’s website shows its obfuscation of the fees is intentional. The Terms of Service
states the fee ranges from 4.99% to 21.90% and the fee you will pay is unknowable until
you are at the machine (which as stated above is hidden below a scrollable window and
long legal jargon). Outside of the Terms of Service which an Iowan can find through a
32
small link near the very bottom of the website, there is no place on CoinFlip’s website
where an Iowan can locate a fee schedule. The cost of a transaction is not mentioned in
the “FAQ” or the “Bitcoin ATMs” section of the website. The site has dozens of blog
posts, and not a single one addresses the cost of the service. The cost of purchasing
Bitcoin through a CoinFlip BTM is effectively hidden from the consumer.
113. This lack of price transparency is important for scam victims who are often using a
Coinflip ATM at the direction of the scammers. These people are typically unfamiliar
with Bitcoin values or exchange rates. These scammers often use threats and emotional
manipulation to fluster their victims and place them in a heightened emotional state. They
then instruct the victims to skip screens quickly, not giving them the time to read the 33
or so pages of the terms of service or warnings on the screen.
114. Some Iowa scam victims have said they were unaware of the high prices being charged
and if they had known about the price CoinFlip charges, it would have made them
question the transaction. It could have been what have stopped Iowa users from putting
their money into the machine entirely.
I. CoinFlip Hides the Cost of Purchasing Using a BTM Behind Iowans’ Experience
with ATM Fees
115. CoinFlip’s use of the term “Bitcoin ATM” in its marketing and advertising further
deceives consumers about its fees.
116. Iowans associate the term “ATM” and associate it with the more common bank ATMs
that often charge a small service fee for their use.
117. When Iowans see CoinFlip’s around $3 “network fee” or “flat fee” prominently displayed on
the Coinflip ATM screen is similar a regular ATM fee, they are tricked into thinking the
around $3 fee is the extent of the fees they must pay.
118. CoinFlip has made a strategic decision to bury all other fees in its Terms of Service, clearly
display a nominal fee, and call its kiosks Bitcoin ATMs. All three of those facts lead to
deception about the BTM fees CoinFlip charges Iowa consumers.
IV. Violations of the Iowa Consumer Fraud Act
119. Under the Act:
The act, use or employment by a person of an unfair practice, deception,
fraud, false pretense, false promise, or misrepresentation, or the
33
concealment, suppression, or omission of a material fact with intent that
others rely upon the concealment, suppression, or omission, in connection
with the lease, sale, or advertisement of any merchandise or the
solicitation of contributions for charitable purposes, whether or not a
person has in fact been misled, deceived, or damaged, is an unlawful
practice.
Iowa Code § 714.16(2)(a).
120. CoinFlip sells merchandise as defined by the Act. Id. Merchandise “includes any
objects, wares, goods, commodities, intangibles, securities, bonds, debentures, stocks,
real estate or services.” Id. § 714.16(1)(e). BTMs provide money transmitter services as
well as sell Bitcoin, which could be considered a good, commodity, or intangible under
the Act.
121. CoinFlip has and is engaged in an “unfair practice”, deception,” and
“misrepresentation” as follows:
A. Selling Bitcoin Through a Kiosk That Allows for Prevalent Scam Transactions is
an Unfair Practice
122. CoinFlip’s practice of selling Bitcoin through its BTMs in a manner that allows for
prevalent scam transactions to be processed constitutes an “unfair practice” that is
unlawful under Iowa Code § 714.16(2). An “unfair practice” is defined as an act or
practice which causes substantial, unavoidable injury to consumers that is not
outweighed by any consumer or competitive benefits which the practice produces.”
Iowa Code § 714.16(1)(i)
123. The amount of money for the period of January 1, 2021, to June 10, 2024, processed
through Iowa BTMs related to confirmed scam transactions totaled a staggering
$13,182,625. This number is only expected to grow as the Attorney General’s office
has only been able to contact or confirm data related to $ 13,888,625 of the total
$50,058,825 of transactions processed during the above period.
124. CoinFlip’s policies comprise a paradigmatic “unfair practice.” BTMs are causing
“substantial, unavoidable injury” to Iowa consumers. Iowans are losing their life
savings, going bankrupt, getting depression, and a myriad of other injuries because of
BTMs.
34
125. The injuries caused by BTMs far outweigh any consumer or competitive benefits under
any equitable weighing test. Any benefit in the vast pile of scams, high transaction fees,
and insufficient refund policies is scant. CoinFlip’s expressed benefit of extending
cryptocurrency to the unbanked underbanked is not the typical case in Iowa.
126. BTMs that operate under CoinFlip’s current policies and practices allow BTMs to
primarily operate as a gateway driver for scammers violates Iowa consumer protection
laws. CoinFlip BTMs create a path to financial ruin for Iowans, and especially older
Iowans. CoinFlip’s deficiencies include, but are not limited to, failing to take timely,
appropriate, and effective action to detect and prevent fraud-induced money transfers
through its BTM system, as described above.
127. CoinFlip knows that its BTMs are frequently used by scammers to defraud older and
vulnerable Iowa consumers, both within this State and elsewhere, but it does not
institute adequate safeguards relate to BTM operations to prevent scam transactions that
could avoid “substantial, unavoidable injuries” to Iowa consumers.
128. Rather, CoinFlip continues to employ practices related to BTMs that are akin to putting
a loaf of bread known to be poisonous on the store shelf with a warning label slapped
on to avoid liability. Both are unlawful under the Iowa Consumer Fraud Act and both
cause “substantial, unavoidable injuries” that are not outweighed by consumer or
competitive benefits.
129. CoinFlip’s practice of selling Bitcoin through a BTM in a manner that allows for
prevalent scam transactions is a violation of the Act. The State is entitled to civil
penalties of up to $40,000 per violation of the Act under Iowa Code § 714.16(7). There
is a violation with respect to each BTM located in Iowa.
B. CoinFlip Deceived Iowans About the Price of Bitcoin Purchased Through Its
BTMs
130. CoinFlip’s practices of failing to conspicuously present Iowa consumers with either the
price of Bitcoin or the fees they pay, hiding the terms regarding the cost of Bitcoin fees
in lengthy, complex documents with inapplicable terms, and using the term “flat fee”
are deceptive acts or practices that are unlawful under the Act.
35
131. “Deception” under the Act is “an act or practice which has the tendency or capacity to
mislead a substantial number of consumers as to a material fact or facts.” The price of a
good or service is a material fact.
132. CoinFlip only advertises the around $3 network fee associated with its BTMs in a clear
and conspicuous manner.
133. The extra charge known as the “Transaction Fee” that CoinFlip charges is buried in a
complex Terms of Service and made unclear to Iowa consumers. It takes sophisticated
math skills to back into determining the total fees associated with the purchase of
Bitcoin from a CoinFlip BTM.
134. CoinFlip further muddies the water by using the phrase “flat fee” on the screens that
Iowa consumers view during their purchase experience.
135. CoinFlip’s deception regarding the pricing and fees associated with the purchase of
Bitcoin through a BTM is a violation of the Act. The State is entitled to civil penalties
not to exceed $40,000 per violation of the Act under Iowa Code § 714.16(7). There is a
violation with respect to each BTM located in Iowa. There is also a violation for each
version of CoinFlip’s Terms of Service delivered to Iowa consumers, and a violation
for the practice of customer service representatives in deceiving Iowa consumers on the
telephone.
C. CoinFlip Misrepresents to Iowa Consumers That it Charges a Flat Fee
136. Although not include in its Terms of Service, CoinFlip advertises to Iowans during
their transaction experience that there is a flat fee of around $3 when purchasing
Bitcoin at a CoinFlip BTM.
137. There is not a flat fee, but rather multiple fees often unknown. Most consumers would
understand a flat fee to be a singular fee representing the total purchase price.
138. CoinFlip’s misrepresentation regarding the flat fee to purchase Bitcoin at its BTMs
violates the Act. The State is entitled to civil penalties of up to $40,000 per violation of
the Act under Iowa Code § 714.16(7). There is a violation with respect to each BTM
located in Iowa.
36
D. CoinFlip’s Violations of the Act Were Committed Against Iowa Consumers Sixty
Years of Age or Older
139. The violations alleged in this Petition were committed against “older individuals,” as
defined under Iowa Code Section 714.16A, those who are “sixty years of age or older.”
Id.
140. The State is thus entitled to additional civil penalties of up to $5,000 for each violation
of the Act that was committed against an older individual.
V. Conclusion and Prayer
The State of Iowa, ex rel. Attorney General Brenna Bird, requests that the Court render
judgment in the State’s favor and:
A. Declare that Defendant has engaged in misrepresentations, deceptions, and unfair
practices against Iowa consumers in violation of the Iowa Consumer Fraud Act, Iowa
Code § 714.16, et seq.;
B. Preliminarily and permanently enjoin Defendant from engaging in the deceptive and
unfair acts described in this Petition whether that be by (i) a permanent ban from
doing business in Iowa; (ii) placing additional safeguards on the operation of BTMs
in Iowa, (3) refunding the full transaction amount to any scam victim whose
transaction was processed through a BTM in Iowa, (4) total fee caps to exceed no
more than a set percentage of the total transaction amount as determined by the Court;
or (iii) any other injunctive relief the Court deems necessary and equitable;
C. Adjudge the Defendant liable for civil penalties of $40,000 for each violation of the
Iowa Consumer Fraud Act;
D. Adjudge the Defendant liable for additional civil penalties of $5,000 for each
violation of the Iowa Consumer Fraud Act committed against an older individual;
E. Order the Defendant to reimburse the full transaction amounts—including but not
limited to the full cash or card amount processed through a BTM—to all Iowa
consumers who (i) purchased Bitcoin through a BTM because they were a scam
victim, (ii) would have been entitled to a refund under CoinFlip’s written refund
policy, or (iii) attest they did not understand the total fees or price of Bitcoin at the
time of their BTM transaction;
37
F. For all Iowa consumers entitled to reimbursement who cannot be located through
reasonable efforts, order the Defendant to disgorge all related funds and property they
acquired from those Iowa consumers through misrepresentations, deceptions, and
unfair practices, and award the funds and property to the State to be used by the
Attorney General under Iowa Code § 714.16(7);
G. Award the State its costs and fees under Iowa Code § 714.16(11), including expert-
witness expenses; costs incurred in pursuing this action and investigation, including
reasonable attorneys’ fees; and prejudgment and post-judgment interest at the highest
lawful rates; and
H. Grant all other relief necessary or appropriate to remedy the effects of Defendant’s
acts or to which the State may be entitled.
Date: February 26, 2025 Respectfully submitted,
BRENNA BIRD
ATTORNEY GENERAL
James R. O’Hollearn
Assistant Attorney General
Laura L. Mommsen
Assistant Attorney General
Daniel L. Barnes
Deputy Attorney General for Consumer Protection
Hoover Building
1305 E. Walnut St.
Des Moines, Iowa 50319
(515) 281-6411
[email protected]
[email protected]
[email protected]
38