New York senator proposes framing new tokens to prevent rug pulls

Rug pulls, soon to be ancient history?

Rug pulls and other cryptocurrency scams soon to be better regulated?

Anyway, that’s what I want Kevin Thomasa New York senator from the Democratic Party also Chairman of the Consumer Protection Committeeto whom the Americans owe in particular the New York Privacy Act (NYPA), a law to protect their privacy.

The bill is subtitled as follows:

“Establish the offenses of virtual token fraud, illegal rug pulls, private key fraud and fraudulent non-disclosure of interest in virtual tokens. »

Thus, the bill tabled sous l’identification S8839is particularly aimed at project developers who would like to start with the checkout, a scenario called rug pull.

In his state, he mentions that any project developer will be guilty of illegal rug pull when he sells more than 10% of the project tokens within five years following the last date of public sale. Note that rug pulls are already penalized on American soil, but the proposal to limiting the sale of tokens in this way is quite innovativeand could prevent many malicious projects.

The private key fraud is assimilated to bank card code theft, insofar as a key allows access to an individual’s entire digital wallet, like a conventional wallet with the card code.

A scenario determined as follows:

“A person, natural or otherwise, is guilty of private key fraud when he obtains or discloses to an individual the private key of another person without his express consent. […] »

The text also refers to developers who implement wallets embedding keyloggers, mechanisms that allow keystrokes typed on a user’s keyboard to be recorded.

👉 On the same subject: NFT – how to identify and avoid the most common scams?

Proposals welcome

We can only warmly welcome such proposals, since unfortunately rug pulls are commonplace, and many malicious individuals do not hesitate to rely on credulity novices, promising mountains and wonders for the future of their token.

In order to defend this point, Senator Kevin Thomas cites the infamous rug pull du token « SQUID » of this beginning of the year 2022:

“Famous examples include Squid Game Coin, which started at a price of $0.016 per token and soared to around $2,861.80 in just one week, before crashing to a price of $0.0007926 within five minutes of withdrawal. In other words, the creators of $SQUID received a 23,000,000% return on investment, and their investors were defrauded of millions. »

The bill also mentions that developers of token projects will have the obligation to list the cryptocurrencies they hold on the home page of their websitein order to report possible conflicts of interest and to play on transparency with the general public.

At the time of writing these lines, the bill is being reviewed by a committee in order to determine whether it will be examined in session.

👉 To go further: A flaw in Convex Finance (CVX) could have triggered a $15 billion rug pull

Source : United States Senate