New York lawmakers crack down on crypto fraud with new bill
New York lawmakers are taking action to combat crypto fraud through a new bill that targets deceptive practices in the industry. Assembly Bill AO6515, introduced by Representative Clyde Vanel on March 5, aims to address various fraudulent activities in the crypto sector, such as rug pulls, private key fraud, and undisclosed financial interests in virtual tokens.
Background
Representative Clyde Vanel, who chairs the Banking Committee and the Subcommittee on Internet and New Technology, has emphasized the need for increased oversight as fraudulent activities continue to rise in the crypto space. Recent data shows a decline in crypto phishing scams by 48% over the past year.
Key provisions of the bill
- Rug pulls: The bill focuses on rug pulls, where developers artificially inflate the value of digital assets before selling them, resulting in losses for investors. Authorities would have the power to prosecute individuals involved in such schemes.
- Private key fraud: The bill classifies private key fraud as a serious offense, similar to debit card PIN theft. This would lead to stricter penalties for unauthorized access to private keys, providing better protection for crypto users.
- Disclosure requirements: The bill introduces strict disclosure requirements for industry participants who hold stakes in virtual tokens they promote. Developers would be required to disclose wallet ownership details to help investors identify potential conflicts of interest and manipulation.
Consequences for violators
The bill outlines severe penalties for individuals and organizations found violating the regulations. Civil fines of up to $5 million for individuals and $25 million for organizations are proposed, along with prison sentences of up to 20 years for serious offenses.
