diff --git a/gradle/libs.versions.toml b/gradle/libs.versions.toml
index 80295a2..e2bdf8d 100644
--- a/gradle/libs.versions.toml
+++ b/gradle/libs.versions.toml
@@ -1,7 +1,7 @@
 [versions]
 arrow = "2.2.1"
 bitcoinj = "0.17"
-domainApi = "0.1.1"
+domainApi = "0.3.0"
 flyway = "11.20.2"
 guice = "7.0.0"
 hikari = "7.0.2"
diff --git a/outie/src/main/kotlin/xyz/block/bittycity/outie/controllers/DomainControllerModule.kt b/outie/src/main/kotlin/xyz/block/bittycity/outie/controllers/DomainControllerModule.kt
index f87239d..6472b3e 100644
--- a/outie/src/main/kotlin/xyz/block/bittycity/outie/controllers/DomainControllerModule.kt
+++ b/outie/src/main/kotlin/xyz/block/bittycity/outie/controllers/DomainControllerModule.kt
@@ -25,6 +25,7 @@ import xyz.block.bittycity.outie.models.Withdrawal
 import xyz.block.bittycity.outie.models.WithdrawalState
 import xyz.block.bittycity.outie.models.WithdrawalToken
 import jakarta.inject.Singleton
+import xyz.block.bittycity.outie.models.Failed
 import xyz.block.domainapi.util.Controller
 
 object DomainControllerModule : AbstractModule() {
@@ -42,6 +43,7 @@ object DomainControllerModule : AbstractModule() {
     scamWarningController: ScamWarningController,
     travelRuleController: TravelRuleController,
     onChainController: OnChainController,
+    failedController: FailedController,
   ): DomainController<WithdrawalToken, WithdrawalState, Withdrawal, RequirementId> {
     val stateToController:
       Map<WithdrawalState, Controller<WithdrawalToken, WithdrawalState, Withdrawal, RequirementId>> =
@@ -76,6 +78,7 @@ object DomainControllerModule : AbstractModule() {
         SubmittingOnChain to onChainController,
         WaitingForPendingConfirmationStatus to onChainController,
         WaitingForConfirmedOnChainStatus to onChainController,
+        Failed to failedController,
       ).mapValues { (_, controller) ->
         @Suppress("UNCHECKED_CAST")
         controller as Controller<WithdrawalToken, WithdrawalState, Withdrawal, RequirementId>
diff --git a/outie/src/main/kotlin/xyz/block/bittycity/outie/controllers/FailedController.kt b/outie/src/main/kotlin/xyz/block/bittycity/outie/controllers/FailedController.kt
new file mode 100644
index 0000000..e50a050
--- /dev/null
+++ b/outie/src/main/kotlin/xyz/block/bittycity/outie/controllers/FailedController.kt
@@ -0,0 +1,39 @@
+package xyz.block.bittycity.outie.controllers
+
+import app.cash.kfsm.StateMachine
+import arrow.core.raise.result
+import jakarta.inject.Inject
+import xyz.block.bittycity.outie.client.MetricsClient
+import xyz.block.bittycity.outie.models.RequirementId
+import xyz.block.bittycity.outie.models.Withdrawal
+import xyz.block.bittycity.outie.models.WithdrawalState
+import xyz.block.bittycity.outie.models.WithdrawalToken
+import xyz.block.bittycity.outie.store.WithdrawalStore
+import xyz.block.domainapi.DomainApiError
+import xyz.block.domainapi.Input
+import xyz.block.domainapi.ProcessingState
+import xyz.block.domainapi.util.Operation
+
+class FailedController @Inject constructor(
+  stateMachine: StateMachine<WithdrawalToken, Withdrawal, WithdrawalState>,
+  withdrawalStore: WithdrawalStore,
+  metricsClient: MetricsClient,
+) : WithdrawalController(stateMachine, metricsClient, withdrawalStore) {
+
+  override fun processInputs(
+    value: Withdrawal,
+    inputs: List<Input<RequirementId>>,
+    operation: Operation,
+    hurdleGroupId: String?
+  ): Result<ProcessingState<Withdrawal, RequirementId>> = result {
+    raise(DomainApiError.InvalidProcessState(value.id.toString(), "Withdrawal is in failed state"))
+  }
+
+  override fun handleFailure(
+    failure: Throwable,
+    value: Withdrawal
+  ): Result<Withdrawal> = result {
+    // Do nothing - withdrawal is already failed
+    raise(failure)
+  }
+}
\ No newline at end of file
diff --git a/outie/src/test/kotlin/xyz/block/bittycity/outie/controllers/FailedControllerTest.kt b/outie/src/test/kotlin/xyz/block/bittycity/outie/controllers/FailedControllerTest.kt
new file mode 100644
index 0000000..7588097
--- /dev/null
+++ b/outie/src/test/kotlin/xyz/block/bittycity/outie/controllers/FailedControllerTest.kt
@@ -0,0 +1,40 @@
+package xyz.block.bittycity.outie.controllers
+
+import io.kotest.matchers.result.shouldBeFailure
+import io.kotest.matchers.should
+import io.kotest.matchers.shouldBe
+import io.kotest.property.arbitrary.next
+import jakarta.inject.Inject
+import org.junit.jupiter.api.Test
+import xyz.block.bittycity.outie.api.WithdrawalDomainController
+import xyz.block.bittycity.outie.models.Failed
+import xyz.block.bittycity.outie.models.FailureReason
+import xyz.block.bittycity.outie.testing.Arbitrary
+import xyz.block.bittycity.outie.testing.BittyCityTestCase
+import xyz.block.domainapi.DomainApiError
+import xyz.block.domainapi.util.Operation
+
+class FailedControllerTest  : BittyCityTestCase() {
+
+  @Inject lateinit var subject: WithdrawalDomainController
+
+  @Test
+  fun `Operating on a failed withdrawal returns an InvalidProcessState error`() = runTest {
+    val withdrawal = data.seedWithdrawal(
+      state = Failed,
+      walletAddress = Arbitrary.walletAddress.next(),
+      amount = Arbitrary.bitcoins.next(),
+    ) { it.copy(failureReason = FailureReason.RISK_BLOCKED) }
+
+    subject.execute(
+      withdrawal,
+      emptyList(),
+      Operation.EXECUTE
+    ).shouldBeFailure<DomainApiError.InvalidProcessState>()
+
+    withdrawalWithToken(withdrawal.id) should {
+      it.state shouldBe Failed
+      it.failureReason shouldBe FailureReason.RISK_BLOCKED
+    }
+  }
+}
\ No newline at end of file