BLOCKCHAIN
BLOCKCHAIN
BLOCKCHAIN
SEC settles with founders of fraudulent initial coin offering that had raised $600M
The U.S. Securities and Exchange Commission today announced a settlement with the founders of AriseBank, a company shut down in January after raising $600 million in a fraudulent initial coin offering.
AriseBank’s former chief executive, Jared Rice Sr., and Chief Operating Officer Stanley Ford were accused of offering and selling unregistered investments in the form of “AriseCoin,” a cryptocurrency tied to AriseBank.
The company claimed at the time to be selling tokens to assist it to establish the “first decentralized bank to offer the first and largest cryptocurrency banking platform in the world.”
In a media release Jan. 25, the company said it was building a “decentralized, peer-to-peer banking platform that allows users of its software to serve as their own bank.” It purported to give people “the freedom to hold, send, receive, buy, sell and spend cryptocurrency directly from their computer or mobile device.”
The SEC noted at the time it closed the ICO down that AriseBank also falsely stated that it purchased an FDIC-insured bank that enabled it to offer customers insured accounts. It also falsely claimed that customers could obtain an AriseBank-branded VISA card to spend any cryptocurrency holdings they had.
Both Rice and Ford also had previous criminal convictions for fraud relating to a scam called BitofGlory in 2014.
Under the terms of the settlement, the pair have been ordered to pay nearly $2.7 million and are prohibited from serving as officers or directors of public companies or participating in future offerings of digital securities.
“The officer-and-director bar and digital securities offering bar will prevent Rice and Ford from engaging in another cryptoasset-based fraud,” Shamoil T. Shipchandler, director of the SEC’s Fort Worth Regional Office, said in a statement.
The settlement caps off a colorful year for ICO scams and SEC actions against them.
Outdoing AriseBank when it comes to false claims was a ICO called Titanium Blockchain Infrastructure Services that was shut down by the SEC in May. The company claimed among other things that it had business relationships with the Federal Reserve and dozens of well-known firms, including PayPal Inc., Verizon Communications Inc., Boeing Co. and the Walt Disney Co.
Image: AriseBank
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