It is possible that cryptocurrency companies will be required to compensate fraud victims in New York, United States. That’s because New York Attorney General Letitia James has proposed a state law aimed at toughening the rules for crypto companies. As Letitia highlighted, the digital asset sector is suffering from “fraud and rampant dysfunction”:
“My office is introducing national legislation to tighten regulations on the cryptocurrency industry,” said James on Twitter. “We are proposing common sense measures to protect investors and end the fraud and dysfunction that have become the hallmark of cryptocurrency.”
Also according to the prosecutor’s tweets, for a long time, fraud in the cryptocurrency sector caused investors to lose hundreds of billions of dollars, “with low-income investors and people of color suffering the most”. Letitia advocated for the cryptocurrency industry to be regulated just as banks and other financial services are.
Cryptocurrencies in New York
According to his proposal, the idea is that New York will require independent public audits of exchanges and other cryptocurrency companies. In addition, it provides for digital asset companies to reimburse customers who are victims of fraud, just as banks do.
The attorney’s proposal also wants her office to have the autonomy to enforce these laws and close companies that violate them. Still according to Letitia, the new law should prevent people who create crypto assets from also owning cryptocurrency platforms and prevent crypto companies from borrowing or lending assets from investors.
In addition, these organizations must provide their customers with risk and conflict of interest information about their business.
In a statement released this Friday (05), Letitia called her proposal “the strongest and most comprehensive set of regulations on cryptocurrencies in the country”.
“My office has taken steps to prevent cryptocurrency companies from operating illegally. Our bill will continue New York’s legacy as a premier financial leader in protecting investors and our economy,” she concluded.
New York puts pressure on crypto companies
In fact, the New York Attorney General is coming down hard on cryptocurrency companies. In February of this year, for example, the office sued the exchange CoinEx for doing illegal business in New York. According to Letitia, CoinEx has not registered to operate in the state.
The prosecutor also filed a lawsuit against Alex Mashinsky, the former CEO of cryptocurrency lending company Celsius in January of this year. She accused Mashinsky of defrauding thousands of investors, including more than 26,000 New Yorkers, out of billions of dollars in cryptocurrency.