New York looking to criminalise crypto frauds

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US Senator Kevin Thomas of New York has proposed a legislative amendment to establish new penalties for rug pulls and other scams involving "virtual token distribution, private key fraud, and fraudulent failure to disclose interest in virtual tokens." Assembly Bill A8820, a related bill, was also introduced in the lower chamber of the New York State Legislature.

Senate Bill S8839m which establishes certain offenses relating to crypto fraud proposes identifying, punishing, and criminalising crimes directed against developers and projects that seek to defraud cryptocurrency investors. It is expected to give prosecutors more clarity on prosecuting crypto crimes while also minimising fraud by utilising the blockchain technology.

The bill proposes a legal change that would impose rug pull penalties on developers who sell "more than 10% of such tokens within five years from the date of last sale of such tokens." It also defines private key fraud as the use or disclosure of another person's private keys without authorisation. Developers who fail to reveal their personal crypto holdings on the main page of project websites may also be held liable for fraudulent failure to disclose a virtual token interest.

The state of New York aims to reinforce its position as a pioneer in the regulatory framework for cryptocurrencies with this latest bill. However, legislators in New York aren't the only ones looking to pass crypto-related laws. Reps Norma Torres of California and Rick Crawford of Arkansas have also introduced bills to mitigate the risks associated with El Salvador's adoption of Bitcoin, for example.

El Salvador's decision to adopt Bitcoin was slammed by Rep. Norma Torres, who said it was "not a thoughtful embrace of innovation, but a careless gamble that is destabilizing the country.”