Proposed New York Bill Looks to Criminalize Crypto Rug Pulls and Scams

The proposed measure also wants to change New York law to make offenses related to virtual token distribution, hidden interest in crypto, and private key misuse illegal.

Senate Bill S8839 aims to define, sanction, and prohibit fraud, as well as developers and initiatives that are designed to defraud crypto investors. With so many of these projects in the business, a law like this has been long overdue.

The measure will provide prosecutors more clarity on how to prosecute crypto crimes while using blockchain technology and avoiding fraud. Rug pull is defined in one section of the bill as when developers

It also defines private key fraud as the unauthorized use or disclosure of another person’s private keys. Developers who fail to publicly declare their own crypto holdings on the project website’s main page may be held accountable for fraudulent failure to disclose a virtual token interest.

The bill has now been referred to the Senate Codes Committee for consideration. Clyde Vanel has also introduced a companion bill in the lower chamber. Assembly Bill A8820 has also been referred to the lower chamber’s Codes Committee.

With the introduction of the bill in the New York legislature, the state cements its position as a forerunner in the regulatory framework for cryptocurrencies. The bill’s study will not be completed on a set date. However, if it is accepted and passed, it will take effect after 30 days.

Legislators in New York aren’t the only ones proposing crypto-related legislation. Norma Torres of California and Rick Crawford of Arkansas, both members of the House of Representatives, have submitted legislation to alleviate the risks connected with El Salvador’s adoption of Bitcoin.

The measure will look at how Bitcoin adoption would influence El Salvador’s cyber security, democratic governance, and economic stability, as well as how it might effect the United States.

El Salvador’s plan to adopt Bitcoin was slammed by Rep. Norma Torres, who said it was not a smart embrace of innovation, but an irresponsible gamble that is undermining the country.

“El Salvador is an independent democracy, and we respect its right to self-govern,” she continued. “But, the US must have a plan in place to protect our financial systems from the risks of this decision.”

El Salvador’s president, Nayib Bukele, has slammed the law, claiming that the US government has no right to interfere in his country’s affairs.