Kennewick officials weigh ordinance to remove Bitcoin kiosks after spike in scams targeting older residents

Sergeant Ramey Reese, a detective in Kennewick's Criminal Investigations unit, told the City Council workshop that on‑site cryptocurrency kiosks (often called Bitcoin ATMs or kiosks) are being used in cons that have produced large, sometimes unrecoverable losses for local victims. "When you take your money down there under the circumstance that I just outlined...we start to trace the locations where you sent it," Reese said, adding that once funds are sent they are often mixed or "tumbled" and the city cannot reliably recover them.

Why it matters: Reese said many victims are older adults who lose savings or retirement funds to these schemes. He described kiosk fees in the 15–25% range, contrasted with online transfers that typically charge far less, and warned that company cooperation in restitution or investigations is inconsistent. City Attorney Lorenzo Sanguino framed the proposal in a broader legal context, saying federal agencies and FinCEN have taken notice and that private kiosk operators have in some cases threatened litigation when municipalities attempted to seize funds.

The proposal and enforcement: Staff described an ordinance option that would remove physical kiosks from city locations while leaving online and app‑based cryptocurrency transactions lawful. If the council approves an ordinance, staff said it would include a 60‑day notice period to current kiosk operators paired with public outreach. "It doesn't prohibit any transactions that are initiated or completed using any other forms," Sanguino said, noting the ordinance targets physical kiosks because staff identified them as common exploitation sites.

Council questions and limits: Councilmembers pressed staff on the data: how often kiosks are used, which companies operate them in Kennewick, and how much of kiosk activity is fraudulent versus legitimate. Reese said his team found about 16 kiosk locations by an online search but did not have operator usage figures—companies generally do not make per‑ATM usage public. He added that most crypto activity is phone‑ or app‑based, "about 99 percent," and that kiosks represent a small share of total transactions, though they are easy for scammers to exploit. Reese said investigators have contacted the FBI on larger cases but federal assistance often requires a higher dollar threshold.

What the city heard from industry: Reese said a CoinFlip government‑relations representative called after local coverage; the company expressed interest in discussing safeguards but did not provide details during the brief call. Staff said they would pursue outreach to operators before any ordinance takes effect.

Next steps: Staff told council the matter could return for a formal vote soon; council members discussed whether additional public input would be required. The ordinance presentation said staff would provide 60 days' notice to affected operators if an ordinance is adopted.

Ending: The workshop discussion closed without a vote on the kiosk ordinance; staff will return with next steps and outreach materials as requested.