New York Senator Kevin Thomas and Assemblymember Clyde Vanel recently submitted a proposed bill to criminalize rug pulls and other forms of crypto fraud to crack down on developers and companies. Lately, thousands of crypto investors have been scammed by developers.
To create and ensure a safe environment for investors, the New York lawmakers are adamant about penalizing rug pulls.
Cryptocurrency is a rising financial market that is worth billions and trillions of dollars. However, with the huge value, crypto scams have also become quite common. Many investors have fallen victim to such scams and frauds.
Every year, there is news about investors losing money due to rug pulls. Rug pulls is a term used in the crypto world that refers to when crypto developers or companies suddenly discontinue their projects and run away with the investment money.
Since there is no legal system to hold these companies accountable, the crypto world is becoming more and more dangerous for investors. Other than rug pulls, people have suffered from virtual token distribution frauds, misuse of private keys, and hidden interests in crypto projects.
Just last month, two individuals were prosecuted in New York for committing the rug pull of Frosties, a scam NFT project. Although the court was able to prove them guilty, still a lot needs to be done to ensure every investor is safe from the web of scammers.
Private key fraud is also a common scam committed against individuals to steal crypto money from their wallets. Many people’s private keys got disclosed or were misused without prior affirmative consent.
Jones and Vanel propose a bill
To cater to investors and ensure their safety in the digital world, New York Senator Kevin Jones and Assemblymember Clyde Vanel proposed a bill to criminalize rug pulls and crypto frauds. He submitted Senate Bill S8839 to the New York State Legislature’s lower chamber for review.
The bill proposes immediate steps to penalize fraud developers and companies. Jones also introduced a new and clear framework to legally criminalize and use it against the fraudulent during investigations.
The bill also specifies:
“A developer, whether natural or otherwise, is guilty of illegal rug pulls when such developer develops a class of virtual token and sells more than ten percent of such tokens within five years from the date of the last sale of such tokens.”
This will ensure that the investors don’t fall for crypto frauds and that the developers are held accountable for their actions.
Furthermore, to avoid private key misuse, the bill also states to charge developers in case they disclose a user’s private information to any party without the consent of the private key’s owner.
The bill is currently under review. If approved, the law will be in effect within thirty days of its passing in New York.
Other than this bill, many legislative developments for cryptocurrency have been introduced in the senate. Recently, California Representative Norma Torres and Arkansas Representative Rick Crawford came forward with legislation to decrease financial risks related to El Salvador’s decision to adopt Bitcoin (BTC) as legal tender.
The representatives said, “El Salvador is an independent democracy and we respect its right to self-govern, but the United States must have a plan in place to protect our financial systems from the risks of this decision.”
The legislation questions El Salvador’s “cybersecurity, economic stability, and democratic governance.”
The bill proposed by Jones and Vanel, including other legislative proposals, signifies that the government and politicians are slowly accepting crypto as an authentic economic currency.
With so much potential in the crypto market, it is essential to protect common people and investors falling victim to crypto frauds and rug pulls by legalizing these crimes. New York’s step to criminalize these frauds can be a good start for the other U.S. states and countries to make a legislative effort in favor of cybersecurity and the crypto market.