AriseBank CEO Faces up to 20 Years in Jail After Guilty Plea

Rice lied to his investors during AriseBank’s ICO when he claimed the startup would offer FDIC-insured bank accounts.

Another fraud prosecution involving cryptocurrencies ended in a guilty plea when a Texas man admitted lying to investors in his phony ICO.

The chief executive of blockchain startup AriseBank, Jared Rice, 31, told a Dallas judge he sought to defraud investors out of $4.2 million. Rice was arrested and indicted in November on three counts of securities fraud and three counts of wire fraud, and he is reportedly facing up to 20 years in jail.

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Rice lied to his investors during AriseBank’s ICO when he claimed the startup would be “the world’s first decentralized cryptocurrency bank” that could offer consumers FDIC-insured bank accounts.

AriseBank marketed itself as a provider ‎of a full-service alternative financial system that combines the strengths of ‎conventional and decentralized banks, a blockchain exchange, and a ‎gold depository. ‎

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Details of AriseBank CEO’s Fraud

Last year, the US Securities and Exchange Commission (SEC) halted AriseBank’s fast-moving initial coin offering that was seeking to raise up to $1 billion from thousands of investors.

Dallas-based AriseBank was ordered to stop its ICO and refund investor proceeds after the SEC released a report stating that it used social media, a celebrity endorsement, and other wide dissemination tactics to raise what it claims to be $600 million of its $1 billion goal in just two months.

The SEC obtained an emergency asset freeze against AriseBank and filed charges against its co-founders Jared Rice and Stanley Ford, alleging that they sold securities claiming that investments in AriseBank would bring “a first-of-its-kind decentralized bank offering a variety of consumer-facing banking products and services using more than 700 different virtual currencies.”

AriseBank falsely claimed that it had signed an ‎agreement to buy the Federal Deposit Insurance Corporation ‎‎(FDIC) insured bank, which has been in operation in the US ‎for over a century. If it went well, the acquisition would ‎give the crypto startup a full traditional banking license, as ‎well as a global network of ATMs and debit cards.‎ AriseBank also allegedly omitted to disclose the criminal background of key executives.

The Banking Commissioner of the state of Texas has also filed a non-appealable cease and desist order against AriseBank, as Finance Magnates reported in 2018.

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