New York State Senator Proposes to Criminalise Crypto Frauds, Rug Pull Scams

Senator Kevin Thomas’ bill amendment is under committee review to determine its eligibility for floor consideration.

By Radhika Parashar | Updated: 25 April 2022 16:38 IST

New York State Senator Proposes to Criminalise Crypto Frauds, Rug Pull Scams

Photo Credit: Pixabay/ Gerd Altmann

Crypto scams reportedly mooched off over $7.7 billion from investors last year

Highlights

Scammers targeting crypto developers and projects under US radar
Senate Bill criminalising crypto frauds include rug pull scams
Amendment bill aimed to establish legal framework around crypto crimes

Hackers and scammers have escalated their activities targeting the crypto sector, the market valuation of which touched $3.007 trillion (roughly Rs. 2,22,79,296 crore) last year. Kevin Thomas, a senator from New York has proposed to add crypto-related scams under the category of criminal offenses. Thomas has introduced a bill amendment request to strictly punish those who exploit virtual currencies and cause financial harm to innocent investors. Hackers striking at crypto developers and projects have also been listed under criminal offenders by Thomas.

Thomas, in Senate Bill S8839, has listed an array of actions that could make for penalised violations.

These include virtual token frauds, private key fraud, and rug pull scams.

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Rug pull scams are those where creators of NFT projects or cryptocurrencies collect quick sales and disappear. In recent times, rug pulls have emerged among top ways to extract loads of money from crypto projects and community members.

Last year, a report by Chainalysis claimed that crypto scams mooched off over $7.7 billion (roughly Rs. 58,697 crore) from investors. Out of this, rug pulls took in more than $2.8 billion (roughly Rs. 21,333 crore) worth of cryptocurrency from scam victims last year in 2021.

Thomas' bill intends to provides a clear legal framework against crypto crimes.

It aims to establish the law amendment implying rug pull charges on those crypto developers who sell “more than 10 percent of such tokens within five years from the date of last sale of such tokens.”

The bill is under committee review to determine its eligibility for floor consideration, CoinTelegraph reported.

US lawmakers are pacing briskly towards legally framing different aspects of crypto.

Earlier in April, two members of the House of Representatives — California Representative Norma Torres and Arkansas Representative Rick Crawford introduced a legislation to mitigate financial risks to the US economy tied to El Salvador adopting Bitcoin as a legal tender last year.

Since El Salvador uses the US dollar as its fiat, BTC use by Salvadorans is expected to have had some impact on the dollar.

Today, I introduced the Accountability for Cryptocurrency in El Salvador Act with @RepRickCrawford. El Salvador's adoption of #Bitcoin is not a thoughtful embrace of innovation, but a careless gamble that is destabilizing the country. https://t.co/Ag9K8fyHMb pic.twitter.com/4N8DN7895w
— Rep. Norma Torres (@NormaJTorres) April 5, 2022

Recently, US President Joe Biden signed executive orders on the government oversight of the cryptocurrency industry.

Crypto holding and trading is not banned in the US. The nation identifies crypto as a property, and not currency. US' Internal Revenue Service (IRS) imposes a tax reportedly between 10 to 20 percent on crypto transactions in the USA.

Meanwhile, other nations are also working on tightening their hold of crypto hackers and scammers.

New rules have been passed in the United Arab Emirates (UAE), guaranteeing stringent punishments for crypto scammers targeting investors in the country.

These rules which came into effect on January 2, 2022, entail prison time for up to five years as well as a penalty up to AED 1 million (roughly Rs. 2 crore).

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Further reading: Cryptocurrency, New York, Kevin Thomas, Crypto Frauds, Rug Pull Scams

Radhika Parashar

Email Radhika

Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More