New York lawmakers are taking a stand against crypto fraud with the introduction of Assembly Bill AO6515. This new bill, proposed by Representative Clyde Vanel on March 5, aims to crack down on deceptive practices within the cryptocurrency sector.
Vanel, who holds key positions in the Banking Committee and the Subcommittee on Internet and New Technology, has emphasized the growing need for stronger regulations to combat fraudulent activities in the crypto space. The bill specifically targets rug pulls, private key fraud, and undisclosed financial interests in virtual tokens.
Rug pulls, a common scam where developers artificially inflate the value of a digital asset before selling off their holdings, leaving investors with significant losses, are a primary focus of the bill. If passed, AO6515 would enable authorities to prosecute individuals involved in such schemes, addressing a problem that has become more prevalent with the rise of memecoins.
Private key fraud, which involves unauthorized access or misuse of private keys, would also be classified as a serious offense under the proposed legislation. This shift would result in stricter penalties for those engaging in such fraudulent activities, offering greater protection for crypto users.
Additionally, the bill introduces stringent disclosure requirements for industry participants who have a stake in the virtual tokens they promote. Developers would be required to disclose wallet ownership details, allowing investors to identify potential conflicts of interest and manipulation.
The bill emphasizes the importance of transparency in the crypto sector, stating, “Buyers have the right to know the degree of control over the virtual tokens price that the developers have and the degree of consolidation of the tokens in the developers.”
To deter violators, the bill suggests imposing civil fines of up to $5 million for individuals and $25 million for organizations. In cases of serious offenses, prison sentences of up to 20 years could be imposed.
In a time where crypto fraud is on the rise, Assembly Bill AO6515 represents a crucial step towards protecting investors and maintaining integrity within the cryptocurrency industry. By holding developers and industry participants accountable for their actions, New York lawmakers are sending a clear message that deceptive practices will not be tolerated.