TL;DR
- New York introduces a bill (A06515) to protect cryptocurrency investors from rug pull scams in the memecoins market.
- The bill proposes criminal penalties for fraudulent practices related to cryptocurrencies, such as security tokens and stablecoins.
- The collapse of the Libra token, backed by Javier Milei, highlights growing concerns about scams in the memecoin market and their impact on investor confidence.
In New York, a bill has been introduced designed to protect cryptocurrency investors from scams known as rug pulls.
This type of fraud occurs when project developers abruptly abandon the initiative and take off with investors’ funds. The proposal, led by Clyde Vanel, chair of the New York Assembly’s Banks Committee, aims to create specific criminal penalties for cryptocurrency fraud-related crimes.
The Problem of Rug Pulls and Memecoins
The bill, titled A06515, establishes criminal charges targeting fraudulent practices associated with cryptocurrencies. These include both security tokens and stablecoins. The text of the law clarifies that security tokens are any form of computer code that determines the ownership of digital assets through transaction verification on a decentralized network.
This bill comes in the context of growing concern over scams in the crypto market, particularly involving memecoins. A recent case that drew attention was the collapse of the Libra token, which was backed by Argentine President Javier Milei.
Libra Knocks Solana to its Knees
In this incident, developers allegedly drained over $100 million in liquidity, causing a 94% drop in the value of the token, leaving investors with massive losses. This collapse also triggered a capital flight to cryptocurrencies considered safer, significantly affecting the Solana blockchain.
For regulatory experts, such as Anastasija Plotnikova, CEO of the regulatory firm Fideum, these scams should be considered illegal and treated with the same rigor as any other crime. Plotnikova argues that rug pulls and other fraudulent activities in the crypto world should receive more attention from authorities due to their negative impact on investor confidence.
