New York Senator Thomas Proposes to Criminalize Rug Pull and Other Crypto Fraud

New York State Senator Kevin Thomas proposed a new bill amendment to establish fraud offenses related to Rug Pull and virtual token distribution, misuse of private keys, and hidden interests in encryption projects.

Senate Bill S8839, authored by Senator Thomas, calls for defining, penalizing, and criminalizing fraud by developers and projects that specifically plan to defraud cryptocurrency investors.

Through the bill, Thomas seeks to provide prosecutors with a clear legal framework for cryptocurrency crimes while at the same time cracking down on fraud. It called for changes to the law to bring Rug Pull charges against developers who “sold more than 10% of such tokens within five years of the date of the last sale of such tokens.”

Private key fraud involves the disclosure or misuse of another's private key without affirmative prior consent. The bill also seeks to charge developers with fraudulently failing to disclose interest in virtual tokens and publicly disclosing personal cryptocurrency holdings on landing pages on major websites.

As of this writing, the bill is under review to determine its eligibility for consideration.

Two members of the House of Representatives — Rep. Norma Torres of California and Rep. Rick Crawford of Arkansas — recently introduced legislation to mitigate the financial risks associated with the adoption of Bitcoin as legal tender in El Salvador.

Today, I introduced the Accountability for Cryptocurrency in El Salvador Act with Rick Crawford. The adoption of Bitcoin in El Salvador is not a well-thought-out innovation, but a careless venture that is destabilizing the country.

— Rep. Norma Torres (@NormaJTorres) April 5, 2022

As Cointelegraph reported, the proposed legislation seeks to analyze risks to El Salvador’s “cybersecurity, economic stability, and democratic governance.” Torres said:

"El Salvador is an independent democracy and we respect its right to self-government, but the United States must develop a plan to protect our financial system from the risks posed by this decision."

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