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

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

The bill, drafted by Sen. Thomas, Senate Bill S8839, seeks to define, penalize and criminalize fraud specifically targeted at developers and projects that intend to defraud crypto investors.

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A fragment of 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 blockchain while combating fraud. It seeks a law amendment that would impose a rogue pull fee on developers who “sell more than 10% of such tokens within five years from the date of the last sale of such tokens.”

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

At the time of writing the bill is under review by the committee to determine its eligibility for floor consideration.

related: US lawmakers introduce collaborative bill to ‘reduce risk’ from El Salvador’s bitcoin law

Two members of the House of Representatives – Representative Norma Torres of California and Rick Crawford of Arkansas – recently introduced legislation to reduce the financial risks associated with El Salvador adopting bitcoin (BTC) as legal tender.

As Cointelegraph reported, the proposed law seeks to analyze the risks to El Salvador’s “cyber security, economic stability and democratic governance.” According to Torres:

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