Michaela
New York lawmakers have introduced a bill to protect investors by cracking down on scams such as crypto rug pulls and private key theft, imposing stricter penalties.
Assemblymember Clyde Vanel, chair of the New York Assembly’s Banks Committee, introduced Bill A06515 on March 5, aiming to strengthen penalties for cryptocurrency fraud. The legislation seeks to amend state law by criminalizing deceptive practices involving virtual tokens, addressing concerns over investor protection in the growing digital asset market.
The proposed legislation would make it illegal for developers to sell more than 10% of a virtual token’s total supply within five years of its last sale, a measure aimed at preventing crypto rug pulls. Exceptions would apply to smaller NFT projects, ensuring compliance without stifling innovation in the digital asset space.
The bill defines “virtual tokens” as including security tokens and stablecoins. It says that “security tokens” encompass both fungible and non-fungible digital assets whose ownership is verified through blockchain transactions or similar decentralized systems. These tokens must be stored on a peer-to-peer network or another secure digital infrastructure.
It also seeks to criminalize unauthorized access to or misuse of private keys without explicit consent. Additionally, it requires developers to publicly disclose their token holdings on their official website, aiming to increase transparency and accountability within the crypto market.
If enacted, the bill would take effect 30 days after becoming law, allowing regulatory agencies time to establish enforcement mechanisms before its implementation.
Moreover, the proposal introduces strict penalties for individuals and businesses involved in fraudulent cryptocurrency activities. Offenders could face fines of up to $5 million and prison sentences of up to 20 years, while corporations and other entities could be fined as much as $25 million for engaging in deceptive practices.
The legislation aims to address the growing number of scams in the crypto industry. With investors losing millions to fraudulent projects and sudden liquidity withdrawals, the bill seeks to implement stronger protections and deter deceptive practices in digital assets.
The introduction follows growing investor frustration over meme coin-related scams, particularly in the wake of the Libra token controversy. The token, which gained attention after being endorsed by Argentine President Javier Milei, collapsed after insiders allegedly siphoned over $107 million in liquidity, making it one of the most notorious crypto rug pulls in recent history.
Within hours, Libra’s value plunged by 94%, erasing nearly $4 billion in investor funds and sparking renewed calls for stronger regulatory oversight in the cryptocurrency market.
Read More
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Michaela has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
