New York lawmakers are pushing for stricter crypto fraud regulations with the introduction of Assembly Bill AO6515. Sponsored by Representative Clyde Vanel on March 5, the bill seeks to criminalize deceptive practices such as rug pulls, private key fraud, and undisclosed financial interests in virtual tokens.
Vanel, who chairs the Banking Committee and the Subcommittee on Internet and New Technology, underscored the urgency of new legal measures as crypto-related scams continue to evolve.
A major provision of the bill equates private key fraud—unauthorized access or misuse of private keys—to traditional financial crimes like debit card PIN theft. This reclassification would introduce harsher penalties for offenders, ensuring stronger protections for crypto investors. Another key element of the legislation focuses on rug pull schemes, where developers artificially inflate asset values before cashing out, leaving investors with substantial losses. If passed, the bill would grant authorities greater power to prosecute those engaging in such fraudulent activities.
The legislation also mandates transparency in token ownership, requiring developers and industry participants to disclose their holdings in virtual assets they promote. This provision aims to prevent price manipulation and conflicts of interest by giving investors clearer insights into market dynamics. The bill states that wallet ownership details are critical for buyers to assess potential risks of market manipulation or sudden sell-offs.
Violators of the proposed law would face severe penalties, including fines of up to $5 million for individuals and $25 million for organizations. Additionally, those convicted of serious offenses could be sentenced to up to 20 years in prison. If enacted, the bill would represent one of the most aggressive regulatory efforts in the U.S. to combat crypto fraud and enhance investor security.
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