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

New York State Senator Kevin Thomas introduced a new bill amendment request to establish certain offenses related to rug pulls and other frauds related to virtual token distribution, misuse of private keys and hidden interests in crypto projects.

The bill drafted by Senator Thomas, Senate Bill S8839, calls for defining, penalizing and criminalizing frauds specifically targeted at developers and projects that intend to dupe crypto investors.

Through the bill, Thomas seeks to provide prosecutors with a clear legal framework against crypto crimes that align with the spirit of the blockchain while combatting fraud. It calls for a law amendment that will imply rug pull charges on developers that sell “more than 10% of such tokens within five years from the date of last sale of such tokens.”

Private key fraud involves disclosing or misusing another person’s private keys without prior affirmative consent. The bill also seeks to charge developers with fraudulent failure to disclose an interest in digital tokens that don’t publicly disclose personal crypto holdings on the landing page of the primary website.

The bill was under committee review to determine its eligibility for floor consideration at the time of writing.

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