The New York Attorney General (NYAG) Letitia James has drafted legislation to tighten crypto regulations in the face of what she perceives as rising fraud in the industry.
This year, governments worldwide are working to build a crypto regulatory framework. Meanwhile, the attorney general has proposed her own measures for investor protection.
Crypto Regulations to be Discussed
According to Bloomberg, the NYAG’s crypto regulations proposal will be discussed in the 2023 legislative session. She calls it the CRPTO Act (Crypto Regulations, Protection, Transparency, and Oversight).
In a Twitter thread, James summarized that the legislation will:
- Require crypto companies to refund customers who are victims of fraud.
- Force independent and public auditing of crypto companies.
- Prevent people who create crypto assets from also owning crypto platforms.
- Stop crypto companies from borrowing or lending investors’ assets.
- Provide investors with risk and conflict of interest information about crypto companies.
- Give NYAG office the power to enforce these laws and shut down companies that violate them.
If the bill becomes law, lending and borrowing platforms may no longer be able to operate in New York. Additionally, many centralized exchanges that have issued their tokens, including Binance, OKX, Crypto.com, and KuCoin, would be unable to provide their services to residents of New York.
NYAG Battle Against Crypto
This year, Letitia James has brought legal troubles for numerous crypto players. Firstly, in January, she sued former Celsius Chief Executive Officer (CEO) Alex Mashinsky, claiming that he defrauded over 26,000 New Yorkers.
However, this Wednesday, BeInCrypto reported that Mashinsky filed a motion to dismiss NYAG’s complaint calling it “baseless.”
Then in February, she sued crypto exchange CoinEx, accusing it of illegally operating in New York. According to NYAG, CoinEx facilitated the trading of tokens, such as Amp, and Library Credits, already deemed securities by the Securities and Exchange Commission (SEC).
She also opposed Binance.US’ acquisition of the lending platform Voyager.
And in March, the NYAG filed a lawsuit against the crypto exchange KuCoin alleging that it allowed the trade of unregistered securities. In the same lawsuit, James called Ethereum (ETH) a security.
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