New York legislators have introduced a new bill aimed at tackling rug pull scams in the cryptocurrency industry, proposing strict criminal penalties for fraudulent activities involving digital assets.
Assemblymember Clyde Vanel, chair of the New York Assembly’s Banks Committee, introduced Bill A06515 on March 5. The bill seeks to specifically criminalise “virtual token fraud,” targeting deceptive practices that result in financial losses for investors.
Defining “Virtual Tokens” and Regulatory Implications
The bill defines “virtual tokens” to include security tokens and stablecoins, covering both fungible and non-fungible assets recorded on peer-to-peer computer networks. If passed, the legislation would set a legal precedent for prosecuting individuals and entities engaging in deceptive cryptocurrency schemes.
The proposed law arrives amid growing investor distrust in memecoins, particularly following the recent collapse of the Libra token, which was publicly endorsed by Argentine President Javier Milei.
The Libra Token Collapse: A Catalyst for Stricter Oversight?
The Libra memecoin turned into one of the most significant rug pulls in recent history. Insiders reportedly siphoned over $107 million in liquidity, causing a 94% price crash within hours and wiping out an estimated $4 billion in investor capital.
This scandal further exacerbated concerns over Solana-based memecoin scams, leading to a capital flight from the network. In February alone, Solana saw $485 million in outflows as investors sought safer alternatives.
Regulatory Challenges and Calls for Law Enforcement Action
The rise of memecoin-related scams has intensified calls for regulatory intervention. Anastasija Plotnikova, co-founder and CEO of blockchain regulatory firm Fideum, believes enforcement agencies must take a firmer stance against rug pulls and insider fraud.
Further revelations about Libra’s insider dealings have emerged, with reports suggesting that some members of the Jupiter decentralised exchange (DEX) knew about the token’s launch two weeks in advance. The extent of insider manipulation surrounding the Libra collapse has only fueled demands for stricter regulations and enforcement actions.
With Bill A06515 now under consideration, New York is positioning itself at the forefront of crypto fraud enforcement. If passed, the legislation could set a new standard for protecting investors and holding bad actors accountable in the fast-evolving digital asset space.
