Imagine pouring millions into building one of the largest Bitcoin ATM networks on the planet, only to discover years later that a huge chunk of the machines you bought were essentially expensive paperweights. That nightmare just became reality for Bitcoin Depot.
Last week the company quietly disclosed that its Canadian subsidiary has been ordered to pay a staggering $18.47 million after losing an arbitration case tied to defective hardware and software. And if that wasn’t enough, the same claimant is chasing the exact same money again in a U.S. bankruptcy court. Talk about double jeopardy.
The $18.5 Million Headache Nobody Saw Coming
It all goes back to 2021, when Bitcoin Depot acquired Ottawa-based BitAccess – a move that looked brilliant at the time. BitAccess was one of the original players in the Bitcoin ATM space, known for decent machines and solid software. The acquisition gave Bitcoin Depot instant scale in Canada and a supposedly battle-tested tech stack.
Fast-forward to 2020 (yes, before the acquisition even closed), BitAccess had signed a massive Master Purchase Agreement with a Las Vegas-based operator called Cash Cloud, the company behind the Coin Cloud brand. Cash Cloud went on an absolute tear, deploying thousands of machines across the United States. At its peak it claimed over 5,700 locations – making it the second-largest BTM operator behind… you guessed it… Bitcoin Depot itself.
Then the wheels came off.
What Went Wrong With the Machines?
According to the arbitration findings, a significant percentage of the BitAccess machines delivered to Cash Cloud suffered from chronic hardware failures and software bugs that made them unreliable or completely inoperable. We’re not talking a few lemons here – we’re talking fleet-wide problems that allegedly cost Cash Cloud tens of millions in lost revenue.
When the 2022–2023 bear market hit and Bitcoin crashed below $17k, Cash Cloud suddenly couldn’t service its debt. In February 2023 saw the company file for Chapter 11 bankruptcy with over $153 million in liabilities. Among the long list of reasons cited for the collapse: “defective equipment received from BitAccess” ranked near the very top.
“Large portions of the fleet were rendered inoperable due to persistent hardware and software defects.”
– Summary of arbitration tribunal findings
The arbitration itself ran for more than three years, with hearings stretching from December 2024 through October 2025. In the end the Canadian Arbitration Association tribunal sided completely with Cash Cloud and awarded the full amount claimed – $18.47 million.
Bitcoin Depot’s Plan: Fight on Two Continents
Bitcoin Depot isn’t rolling over. The company immediately announced that BitAccess will petition Canadian courts to set aside the award – the only real way to overturn an arbitration decision in Canada (think jurisdictional errors or serious procedural flaws). Success is rare, but not impossible.
Making things spicier, Cash Cloud also filed an almost identical claim in the U.S. Bankruptcy Court for the District of Nevada back in 2023. They argue that certain damages fall outside the scope of the Canadian arbitration clause. If both awards are upheld, Bitcoin Depot could theoretically owe the money twice – an outcome the company calls “duplicative” and is fighting aggressively to prevent.
Personally, I’ve seen these parallel-proceeding nightmares play out in tech contract disputes before. They usually end with one forum deferring to the other, but not before both sides burn millions in legal fees.
How Bad Is This Financially?
Let’s put $18.5 million in context.
Bitcoin Depot reported $162.5 million revenue in Q3 2025 and a respectable $5.5 million net income. An unexpected $18–20 million hit would wipe out several quarters of profit and force the company to dip into cash reserves or credit lines. The stock (BTM on Nasdaq) already trades with crypto-like volatility – this news sent it down over 8% in a single session.
- Current cash & equivalents: ~$35 million (per latest 10-Q)
- Outstanding revolver availability: ~$20 million
- 2025e free cash flow guidance was $20–25 million before any award
In other words, the award is material, but not immediately fatal – assuming the company can delay or reduce payment.
Bigger Picture for the Bitcoin ATM Industry
Here’s what worries me more than Bitcoin Depot’s balance sheet: this case exposes how fragile the BTM boom really was.
Between 2020 and 2022 operators installed machines at breakneck speed, often buying whatever hardware was available. Quality control took a back seat to “land grab” mentality. Many smaller fleets are still running five- or six-year-old hardware with outdated software that barely limping along on Android 7.
When Bitcoin hit $69k in 2021, transaction fees covered a multitude of sins. At $16k in late 2022, every broken screen or frozen kiosk became a bleeding wound. We saw the first wave of consolidations (Genesis Coin buying half the market, Bitcoin Depot going public via SPAC, etc.). This arbitration feels like the second wave – legal fallout from the frenzy.
What Happens Next?
Short term:
- BitAccess files to annul the Canadian award (expected any day)
- Bitcoin Depot moves to stay or dismiss the Nevada bankruptcy adversary proceeding
- Both sides dig in for 12–24 months of procedural trench warfare
Longer term, I suspect the parties will eventually settle for something south of $18 million once everyone realizes prolonged litigation helps nobody. Cash Cloud’s creditors just want recovery; Bitcoin Depot wants certainty. There’s a deal to be made.
But until then, every Bitcoin ATM operator is quietly checking their own supplier contracts and wondering who might be next.
Because if the biggest player in the space can get hit this hard over hardware quality, nobody is truly safe.
Stay tuned – this story is far from over, and the outcome could reshape how the entire Bitcoin ATM industry thinks about risk.
