New York Lawmakers Take a Strong Stance Against Crypto Fraud

Assemblymember Clyde Vanel has introduced a new bill aimed at curbing deceptive practices, including rug pulls and private key theft.

New York lawmakers are making their feelings on crypto fraud clear.

Assemblymember Clyde Vanel has introduced a new bill that aims to curb deceptive practices, including rug pulls and private key theft.

The proposed legislation, Assembly Bill 6515, seeks to amend the state’s penal law by establishing criminal penalties for fraudulent activities related to virtual tokens. These include rug pulls, private key fraud, and failure to disclose financial interests in digital assets.

The proposed legislation, Assembly Bill 6515, seeks to amend the state’s penal law by establishing criminal penalties for fraudulent activities related to virtual tokens. These include rug pulls, private key fraud, and failure to disclose financial interests in digital assets.

The bill defines a "rug pull" as the complete cessation of involvement in a virtual token after selling more than 10% of the total supply within five years, with an exemption for NFT projects with less than 100 tokens or a total value of less than $20,000 at the time of the rug pull.

“A developer, whether natural or otherwise, is guilty of illegal rug pulls when such developer develops a class of virtual token and sells more than ten percent of such tokens within five years from the date of the last sale of such tokens,” the bill states.

“This section shall not apply to non-fungible tokens where a developer has created less than one hundred non-fungible tokens that are regarded as part of the same series or class of non-fungible tokens or where such non-fungible tokens regarded as part of the same series or class are valued at less than twenty thousand dollars at the time the rug pull occurs,” the bill read.

The bill defines a "rug pull" as the complete cessation of involvement in a virtual token after selling more than 10% of the total supply within five years, with an exemption for NFT projects with less than 100 tokens or a total value of less than $20,000 at the time of the rug pull.

“A developer, whether natural or otherwise, is guilty of illegal rug pulls when such developer develops a class of virtual token and sells more than ten percent of such tokens within five years from the date of the last sale of such tokens,” the bill stated.

“This section shall not apply to non-fungible tokens where a developer has created less than one hundred non-fungible tokens that are regarded as part of the same series or class of non-fungible tokens or where such non-fungible tokens regarded as part of the same series or class are valued at less than twenty thousand dollars at the time the rug pull occurs,” the bill read.

The proposed legislation also criminalizes the unauthorized access or misuse of private keys for virtual tokens or wallets without the express consent of the owner.

The bill further mandates that developers disclose their own token holdings on their primary website to promote transparency.

The new law would take effect 30 days after passage, with provisions for regulatory bodies, including the Department of Financial Services and the Bureau of Economic Analysis, to take steps for enforcement and reporting before the effective date.