New York lawmakers introduced a new bill on March 5 aimed at combating cryptocurrency fraud, particularly rug pulls.
New York lawmakers introduced a new bill on March 5 aimed at combating cryptocurrency fraud, particularly rug pulls. Assembly member Clyde Vanel, chair of the New York Assembly’s Banks Committee, presented Bill A06515, which seeks to create criminal penalties for fraudulent activities involving cryptocurrencies. The bill is focused on preventing "virtual token fraud," which includes deceptive practices related to cryptocurrencies. If passed, the legislation would introduce new criminal charges to hold perpetrators accountable for scams that harm investors.
This proposal comes on the heels of several high-profile incidents involving meme coins. The Libra token, endorsed by Argentine President Javier Milei, is one of the most significant examples. Insiders allegedly stole over $107 million in liquidity from the project, causing the token's value to collapse by 94% within hours, resulting in a $4 billion loss for investors. This incident highlights the growing concern over the rise of scams in the crypto industry, particularly with meme coins. In February, Solana saw over $485 million in outflows due to increasing meme coin scams, prompting investors to move their capital to “safer” assets.
The bill addresses this growing problem by targeting fraudulent activities that are occurring on a larger scale. The crypto space is dealing with a staggering $51 billion in annual losses due to crimes, according to Chainalysis. While past attempts to regulate the industry, such as the 2021-2022 Senate Bill S8839, failed to pass, this new bill represents a renewed effort to tackle crypto crime.
Anastasija Plotnikova, CEO of blockchain regulatory firm Fideum, emphasized that the rise of scams and fraud in the industry should be under the jurisdiction of law enforcement. Plotnikova stressed that these scams are not only unethical but also illegal, and law enforcement agencies must be given more tools to combat them. Her comments came after the significant collapse of the Libra token, which left many investors in turmoil. The scandal also revealed that some members of the Jupiter decentralized exchange knew about the Libra token launch two weeks before it happened, raising concerns about insider trading.
While the U.S. Securities and Exchange Commission (SEC) has set up a Cyber and Emerging Technologies Unit to address crypto crime, the industry still struggles with fraud. In 2023, the FBI reported a 45% increase in crypto-related losses, totaling $5.6 billion.
As the crypto market continues to deal with scams, New York's new bill represents an important step toward tightening regulations and protecting investors from fraudulent schemes.
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