Bitcoin Depot Faces $18.5 Million Arbitration Award Amid Legal Challenges Over ATM Issues

Bitcoin Depot Inc. is under substantial legal and financial strain as its Canadian subsidiary has been ordered to pay an $18.47 million arbitration award. This decision is the result of ongoing allegations that defective hardware and software have severely hindered the operation of thousands of Bitcoin ATMs managed by Cash Cloud, a now-bankrupt kiosk operator.

Key Takeaways:

Bitcoin Depot’s Canadian subsidiary faces an $18.47 million arbitration ruling linked to faulty Bitcoin ATM equipment.
Allegations originate from Cash Cloud, which claimed defective systems caused significant operational failures.
Bitcoin Depot is involved in a separate lawsuit in U.S. Bankruptcy Court, with potential overlapping claims.
The company reports mixed financial results, showing a rise in year-over-year revenue but a decline from the previous quarter.

Cash Cloud's Claims Against Bitcoin Depot

Bitcoin Depot Faces $18.5 Million Arbitration Award Amid Legal Challenges Over ATM Issues

The arbitration ruling, revealed in a Form 8-K filing on November 24, adds further uncertainty to the operations of the Atlanta-based company, which is also dealing with a second lawsuit demanding similar damages in U.S. Bankruptcy Court.

Legal Ruling Details: Arbitration Findings Against Bitcoin Depot

The arbitration award was issued by a tribunal from the Canadian Arbitration Association after hearings took place from December 2024 to October 2025. The central issue revolves around BitAccess Inc., a Canadian hardware and operating system provider that was acquired by Bitcoin Depot in 2021.

Cash Cloud, which previously operated over 5,700 Bitcoin ATMs under the Coin Cloud brand before filing for Chapter 11 in 2023, alleges that the equipment provided by BitAccess made a significant portion of its machines non-functional, resulting in considerable financial losses.

The dispute began in August 2022 when Cash Cloud accused BitAccess of violating a Master Purchase Agreement established in 2020. The arbiters ultimately sided with Cash Cloud, affirming the extent of the damages it claimed, resulting in the full $18.47 million award.

Bitcoin Depot announced that BitAccess plans to contest the ruling and is working to have it overturned. However, they also noted uncertainty regarding the potential outcome.

Parallel Legal Issues: U.S. Lawsuit Adds Complexity

Alongside the arbitration proceedings, Bitcoin Depot is facing a related legal issue in Nevada. Cash Cloud has filed a lawsuit in the U.S. Bankruptcy Court for the District of Nevada, claiming that some of its demands are beyond the Canadian tribunal's jurisdiction and seeking additional derivative damages related to the same contract.

This Nevada lawsuit also seeks $18.47 million in damages, creating a potential risk for Bitcoin Depot of having to address overlapping claims if the cases are not consolidated.

Bitcoin Depot believes that the U.S. lawsuit significantly overlaps with the arbitration findings and anticipates that outcomes in Canada could potentially resolve or diminish the bankruptcy litigation. The company has asserted that the U.S. lawsuit is "without merit" and will continue to defend against it.

Cash Cloud filed for Chapter 11 protection in February 2023, citing liabilities exceeding $153.9 million. During the bankruptcy process, the company identified the disputed BitAccess equipment, a failed software agreement, a costly hack, and alleged misconduct by a previous executive as factors contributing to its downfall.

Bitcoin Depot's Financial Figures

Financial Performance Amid Legal Turbulence

Bitcoin Depot’s current legal challenges coincide with mixed financial results for the company. They reported $162.5 million in revenue for the third quarter, marking a 20% increase year-over-year, and a 139% rise in net income to $5.5 million in the same period.

However, both revenue and net income showed a quarter-over-quarter decline, with a 6% drop in revenue from Q2 and a roughly 55% decrease in net income. Earnings per share stood at $0.08, which is half of the previous quarter’s $0.16.

Bitcoin Depot operates over 9,000 ATMs across the United States, Canada, and Australia. Arbitration disputes are becoming increasingly common in the cryptocurrency sector, with companies like Payward, which operates Kraken, having faced post-arbitration legal challenges. In some instances, courts have declined to enforce these awards due to public policy issues.

One notable case mentioned in Bitcoin Depot's filing involved Payward, where an English court refused to enforce an arbitration award over concerns it might obstruct a consumer's ability to pursue potential financial-regulatory claims.