Bitcoin ATMs tied to millions in scams now banned in an Eastern WA city
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- Kennewick passed an ordinance banning new and current cryptocurrency ATM kiosks.
- Machines must be removed within 180 days or operators risk their business license.
- Nearly $1 million in kiosk losses have been reported by Kennewick residents since 2023.
Kennewick passed the Tri-Cities’ first ban on cryptocurrency ATMs this week, marking the first substantial step in the region to crack down on fraudulent transactions that have drained residents’ banks accounts and life savings.
The city council on Tuesday approved an ordinance prohibiting the new placement of kiosks in the city, and requiring current businesses to remove some 16 machines currently in operation within 180 days. The city is also planning an awareness campaign about the risks of these scams.
Since 2023, more than three dozen residents have collectively reported “life altering” losses totalling $1 million to Kennewick police and investigators. Experts believe it could be the tip of the iceberg, and that there could be millions of dollars more in losses that have gone unreported.
The ordinance passed unanimously, 7-0, with little discussion. The city council has spent nearly two months studying, questioning and debating the proposed regulation, including meeting with a Spokane police detective who has pioneered regulation in Washington state.
“This has not been something that I knew was a major concern, and hearing the report and the statistics of the challenges associated with our city, in particular, and others in the area, I’m very happy to see this coming forward for a vote this evening,” Mayor Jason McShane said on Tuesday night.
Kennewick’s ordinance cites Washington state law as its authority to regulate activities “for the presentation of public morality, health, peace, and good order within city limits.”
It says that it is “unlawful for a person or entity to place, permit the placement, operation or permit the operation of a virtual currency kiosk” in the city, and says machines in operation after April 21 must be removed at the operator’s expense. The city says it can deny or revoke business licenses from operators who refuse to remove their machines or who install new ones.
It does not restrict cryptocurrency or virtual currency transactions from being completed within city limits without the use of kiosks, though.
Officials in Pasco and Richland have said they are aware of Kennewick’s ordinance, but neither have started their own efforts to restrict or regulate the ATMs. Federal legislators have been relatively mum about regulating cryptocurrency ATMs, which has left cities and municipalities to step in.
‘Loaded bear trap in a grocery store’
In the last three years, Tri-Citians have reported to police the loss of $2.4 million in cryptocurrency scams. There are at least 76 kiosks across the Tri-Cities, with more being added each year.
These kiosks allow residents to buy and sell cryptocurrencies, such as Bitcoin, using cash or debit cards. Instead of bank accounts, they connect to anonymous crypto wallets.
Cryptocurrencies are unregulated digital assets that use decentralized systems to record transactions and rely on online cryptography to prevent counterfeit or fraud transactions.
Victims often transfer large sums of cash — sometimes their entire life savings, worth tens of thousands of dollars — to overseas swindlers. Transactions are often instant and irreversible, making prosecution and money recovery incredibly rare.
Spokane police Detective Tim Schwering characterized the terminals as similar to a “loaded bear trap in a grocery store” in a recent discussion with the Kennewick council.
Scammers impersonate government officials, police or romantic partners the victims met online. They’ve also begun using AI technology to create voice replicas of loved ones to fraudulently demand money.
Police say the crypto machines are susceptible to fraud because scammers direct victims to deposit money into their “wallets.” They often use money exchanges or wallet layers to hide their identities.
U.S. residents are scammed out of billions of dollars each year from fraudulent cryptocurrency schemes, and it’s become a rapidly growing issue in recent years. Nearly 150,000 victims were tied to more than $9 billion in losses in 2024, according to an FBI report. Most are between 20 and 40 years old, but older adults reported larger sums lost
Scammers often communicate with victims under the guise of investment opportunities, celebrity impersonations, financial grooming, extortion, or romance scams, according to AARP. They often pressure or coerce individuals to act quickly.
In order to avoid becoming a victim, avoid responding to messages or calls that promise quick investment returns or purchases, and never mix online dating with investment advice, the FTC warns.
Be wary of bogus business, government or job impersonators, and make sure to conduct thorough research on whomever may be contacting you. The FBI recommends reporting blackmail and criminal extortion online at reportfraud.ftc.gov.
