City Council delays approval of cryptocurrency fraud ordinance

STERLING HEIGHTS — New rules aimed at preventing individuals from losing money to scam artists are now set for approval in the new year.

The Sterling Heights City Council was scheduled to adopt an ordinance that adds licensing and other operational regulations for virtual currency machines at its Dec. 16 meeting, but postponed action in favor of tightening user restrictions even further than previously discussed. 

The council added a $2,000 daily limit and a $10,000 monthly cap on transactions conducted at crypto kiosks and bitcoin ATMs located in the city. The revised ordinance will be considered at the council’s Jan. 6 meeting.

The Sterling Heights Police Department has reportedly investigated 23 incidents of fraud tied to cryptocurrency machines, with losses amounting to more than $542,000.  

The City Council’s stated goal with the new rules is protecting residents, especially senior citizens, from falling prey to criminals who deceptively lure individuals into turning cash into cryptocurrency.

“These scams typically begin with an unsolicited message or call designed to create panic, pressuring victims into withdrawing cash and depositing it into a cryptocurrency ATM,” the city said in a Dec. 1 press release. “Once converted, the funds are often irretrievable.”

Cryptocurrency is a form of digital money that can be transferred online without the need for a middleman like a bank or payment processor. Popular types of crypto include bitcoin, ethereum and tether.

At the Dec. 16 meeting, Cassie Thierfelder, manager of advocacy for AARP Michigan, urged council members to add a daily transaction limit of $1,000 to its crypto ordinance and applauded city officials for their efforts to protect vulnerable residents.

“Crypto scam fraud is the fastest growing fraud industry and its impact is profound, particularly when victims are older adults who are at a time in their lives when they are least able to recover financially,” she said. 

Thierfelder provided the council with information recognizing crypto kiosk fraud as a nationwide problem, stating that there are more than 30,000 such machines across the country and that more than $246 million in stolen funds has been reported. The vast majority of losses were experienced by adults over 60 years of age.

“We at AARP are so grateful to you for considering this important step toward protecting your residents from crypto kiosk fraud,” Thierfelder said.

Council members debated the daily amount limit for several minutes before ultimately settling on the $2,000 figure. There was some concern regarding the effect on legitimate transactions, but officials concluded that traditional cryptocurrency users conduct business through their personal computers, not at kiosks.

Mayor Pro Tem Barbara Ziarko also suggested, as she has previously, that the city should do more to educate residents about crypto fraud. She said the city could perhaps tap AARP to provide informational sessions at the senior center or library.

Call Staff Writer Gary Winkelman at (586) 498-1070.