New York Senator Introduces Bill To Criminalize Crypto Fraud

The rise of the crypto realm brought both benefits and drawbacks, and while the public recognized the benefits of the technology, criminals recognized how to use it to commit crimes.

As a consequence, hackers, fraudsters, and exploiters have appeared in the crypto realm, preying on naive investors and defrauding them of millions of dollars.

There Are No Longer Any Rug Pulls

Senator Kevin Thomas of New York presented legislation in the state senate today that would criminalize crypto crimes and impose penalties.

Thomas, who is also the Chairman of the Consumer Protection Committee, filed a bill titled – An act to alter the criminal legislation in regard to the establishment of certain crimes pertaining to crypto fraud.

The bill's main emphasis is on rug pulls, which are presently causing havoc on the bitcoin business, according to the proposed law.

Rug pulling is a circumstance in which a project seems to be genuine but is really handled by a person or individuals who destroy the business after enough investors engage and then flee with all of the money put in the project.

"Famous instances include Squid Game Coin ($SQUID), which began at a price of $0.016 per coin, soared to roughly $2,861.80 per coin in only one week, and then crashed to a price of $0.0007926 in less than five minutes following the rug pull," the bill said, citing the Squid Games-inspired token SQUID as the precedent for the legislation. 

To put it another way, the SQUID founders made a 23,000,000% profit on their investment, while their investors were duped out of millions. Prosecutors will have a clear legal framework in which to prosecute these sorts of crimes under this measure."

However, the actual penalties and budgetary repercussions have yet to be determined, and will be after the law is enacted.

Crypto-Crimes are on the Rise

Rug pulls may seem like legend, but they still exist, and they were single-handedly responsible for $2.8 billion in crypto-crime.

However, over time, these rug pullers have shifted their attention from classic token scamming to DeFi initiatives, notably NFTs.

Last year, the NFT market boomed, with many new NFT collections appearing on a regular basis. Investors bought these NFTs out of fear of missing out, and in one case, they lost $1.3 million.

The Frosties NFT project, which deceived its investors on January 11 when its 8,888 NFTs abruptly lost all value, was the first significant rug pull of 2022.

According to sources, the project's Twitter and Discord accounts, as well as its website, mysteriously vanished. An anonymous invader had taken $1.1 million (ETH) and $4,000 worth of Ether tokens in the previous two days, it was subsequently discovered.

Thus, although criminalizing rug pulls may put a stop to it, it still leaves a loophole for other crimes, which must be criminalized as quickly as possible.