03-06-2025
Spokane City Council eyes banning crypto kiosks, citing devastating fraud to vulnerable residents
Jun. 2—Spokane may soon outlaw kiosks that allow people to purchase cryptocurrencies without going to well-known digital marketplaces — and according to law enforcement, have become a tool for scammers.
The Spokane City Council introduced the ordinance, sponsored by Councilman Paul Dillon and City Council President Betsy Wilkerson, on Monday, after the state Legislature failed to advance additional regulation on the kiosks, increasingly common in grocery and convenience stores, earlier this year.
The scam involving gift cards may be better known to most.
A scammer posing as an IRS agent, the Secret Service, a tech support agent or even a relative calls a victim who is typically older or unfamiliar with technology and tells them to transfer funds immediately. But rather than going through a bank where there may be some protections, the victim is instructed to go to a grocery store, purchase thousands of dollars of gift cards and give the scammer the codes on the back. At that point, the money is gone for good.
The same scam is now increasingly applied to cryptocurrency kiosks, substituting Amazon gift cards for Bitcoin, according to Spokane Police Department Detective Timothy Schwering.
"They would give the story that 'We're with the Secret Service, you might be in a money -laundering ring, and we need to make sure your money's safe,'" Schwering said. "They get people alone, maybe they're older, and they get confused and panic."
Schwering said he's aware of at least three suicides in Spokane County related to these scams.
"You have people who are putting tens of thousands, hundreds of thousands into these machines and wiping out their life savings," he said.
And unlike gift cards, Schwering argues that the kiosks have little legitimate use, particularly given the prevalence of digital marketplaces to purchase cryptocurrencies. He's not opposed to cryptocurrencies themselves, praising the technology behind them, but believes the kiosks are particularly prone to fraud and abuse.
"People in the industry will say this is a great way for people to use crypto, but if you put money in the crypto kiosks, the fees can be around 20% — Cryptobase on my phone, it's pennies for the same transaction," Schwering said. "It's hard to say people are using these for legitimate business."
The FBI's Internet Crime Complaint Center received more than 5,500 complaints of fraud related to cryptocurrency kiosks in 2023 alone, with losses of over $189 million. Most of those complaints involved a caller impersonating tech support, impersonating a government official, or a confidence or romance scheme.
A 2023 FBI report claims that cryptocurrency is exploited by criminals because of the difficulty of following the funds after transactions that are also quick and irrevocable.
"There were cases I was confident I knew the name and bank account, but he was sitting in mainland China, and there was nothing I could do about it," Schwering said.
Spokane wouldn't be the first to ban the kiosks. The city of Stillwater, Minnesota, barred them in April, and several other Minnesota cities are considering similar regulations.
As cryptocurrencies become more prevalent, the kiosks can now be found in reputable businesses around Spokane, such as Safeway and Walgreens.
"When I first started doing this, there wasn't a ton of these kiosks around town," Schwering said. "There's hundreds now. I get calls on these things daily, people putting thousands and thousands into these things and losing it all."
Schwering and Dillon had testified to the state legislature in favor of regulations that would limit daily transactions and fees, but while the legislation got out of committee, it wasn't taken up for a vote before the end of this year's legislative session.
The proposal to act appears to have widespread support on the City Council, with Councilman Jonathan Bingle praising it at an April committee meeting for positioning Spokane to be on the "cutting edge" of the issue in Washington state.
The ordinance is currently scheduled for a vote at the June 16 council meeting.
