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

New York State Senator Kevin Thomas has submitted a new request to amend the bill to establish certain crimes related to carpet thefts and other fraud related to the distribution of virtual tokens, the misuse of private keys and the hidden interests in crypto projects.

The bill authored by Senator Thomas, Senate Bill S8839, calls for defining, penalizing, and criminalizing fraud that specifically targets developers and projects that seek to mislead crypto investors.

An excerpt from Senate Bill S8839. Source: nysenate.gov

Through the bill, Thomas seeks to provide prosecutors with a clear legal framework against crypto crimes that aligns with the spirit of the blockchain while combating fraud. He calls for an amendment to the law that will imply additional charges to developers who sell “more than 10% of said tokens within five years from the date of the last sale of said tokens.”

Private key fraud involves the disclosure or misuse of another person’s private keys without prior affirmative consent. The bill also seeks to charge developers for failing to publicly disclose their interest in virtual tokens that do not publicly disclose personal crypto holdings on the landing page of the main website.

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

Related: US Lawmakers Present Supplemental Bill to ‘Mitigate Risks’ of El Salvador’s Bitcoin Law

Two members of the House of Representatives, California Representative Norma Torres and Arkansas Representative Rick Crawford, recently introduced legislation to mitigate the financial risks tied to El Salvador adopting Bitcoin (BTC) as legal tender.

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

“El Salvador is an independent democracy and we respect its right to self-government, but the United States must have a plan to protect our financial systems from the risks of this decision.”