New York lawmakers introduce legislation aimed at cracking down on cryptocurrency fraud

The legislation proposes new criminal charges for “virtual token fraud,” a category designed to address deceptive practices in the cryptocurrency space

New York lawmakers are aiming to crack down on cryptocurrency fraud with a new bill that sets out criminal charges for “virtual token fraud” in response to the growing threat of rug pulls and other scams.

Assemblyman Clyde Vanel, chair of the New York Assembly’s Banks Committee, introduced Bill A06515 on Wednesday, March 5. The legislation proposes several new criminal charges for "virtual token fraud," a category designed to address deceptive practices in the cryptocurrency space, according to an original report by Cointelegraph.

The bill defines “virtual tokens” broadly to include security tokens, stablecoins and other blockchain-based assets, ensuring that a variety of potential fraud schemes fall within its scope.

A response to meme coin scams and liquidity mining

The move follows concerns over widespread fraud in the crypto industry, particularly in the volatile meme coin sector. The bill is said to be partly motivated by the collapse of the Libra token, a Solana (SOL) cryptocurrency that was endorsed by Argentine President Javier Milei.

The token’s insiders allegedly withdrew over $107 million in liquidity from the project, triggering a 94% price collapse within hours and wiping out nearly $4 billion in investor capital.

Regulatory experts have warned that such scams demand stronger enforcement. Anastasija Plotnikova, co-founder of blockchain regulatory firm Fideum, stated that rug pulls are “not only unethical but also clearly illegal” and should be firmly within the ambit of law enforcement agencies.

"This is theft, pure and simple. It is not covered by any legal gray areas or technicalities. Law enforcement must intervene and hold the perpetrators accountable for their actions," Plotnikova asserted.

As cryptocurrency fraud continues to rise and investors experience increasing losses, New York’s latest proposal signals a move toward stricter regulation. If passed, the bill could set a precedent for other states seeking to combat digital asset scams.

Meanwhile, the Official TRUMP meme coin has recently sparked ongoing analysis of its impact on the cryptocurrency market. Despite reaching a $14.5 billion market cap in less than a day and attracting 400,000 new crypto users, its effect on overall market capitalization is minimal.