NY Sen. Thomas proposes to criminalize rug pulls and other crypto frauds

Kevin Thomas, a New York State Senator, introduced a bill amendment to address certain offenses in relation to rug pulling and other frauds involving virtual token distribution and misuse of private keys.

Senator Thomas’s bill, Senate Bill S8839 (Senate Bill S8839), calls for the definition, penalization, and criminalization of frauds targeted specifically at developers and projects that aim to deceive crypto investors.

Here is a snippet from Senate Bill S8839. Source: nysenate.gov

Thomas’ bill aims to give prosecutors a clear legal framework for crypto crimes, which align with the spirit and combat fraud. The bill calls for a law amendment to entail rug pull charges against developers who sell “more than 10%” of these tokens within five year of the last sale.

Private key fraud is the act of disclosing or using another person’s keys without their consent. Developers could also be charged with fraudulent failure to disclose an interest in virtual tokens if they don’t disclose their personal crypto holdings publicly on the landing page.

To determine if the bill is eligible for consideration on the floor at the time it was written, the committee reviewed it.

Related: US legislators introduce companion bill to “mitigate risks” from El Salvador’s Bitcoin Law

California Representative Norma Torres, and Arkansas Representative Rick Crawford were the two members of Congress who recently introduced legislation to reduce financial risks associated with El Salvador’s adoption of Bitcoin (BTC).

Today, @RepRickCrawford and I introduced the Accountability for Cryptocurrency in El Salvador Act. The adoption of #Bitcoin by El Salvador is not an intentional embrace of innovation but a reckless gamble that is threatening the country. https://t.co/Ag9K8fyHMb pic.twitter.com/4N8DN7895w
— Rep. Norma Torres, @NormaJTorres, April 5, 2022

Cointelegraph reported that the legislation proposed seeks to assess the risks to El Salvador’s cybersecurity, economic stability, and democratic governance. Torres:

“El Salvador is an independent democracy. We respect its right of self-governance. But the United States must have a plan to protect our financial system from the risk of such a decision.”