The U.S. Securities and Exchange Commission has obtained a court order to shut down a company that had already raised $600 million in an initial coin offering.

Called AriseBank, the company was selling tokens to assist in establishing 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” that would give “people the freedom to hold, send, receive, buy, sell and spend cryptocurrency directly from their computer or mobile device.”

In a statement, the SEC accused AriseBank and its co-founders Jared Rice Sr. and Stanley Ford of offering and selling unregistered investments in their purported “AriseCoin” cryptocurrency by depicting AriseBank as a first-of-its-kind decentralized bank offering a variety of consumer-facing banking products and services using more than 700 different virtual currencies.

The SEC has previously drawn the line between ICOs that raise funds for in-house use versus token and coin raises tied to securities in the given company, saying in July that the tokens constitute financial securities and are therefore subject to securities law.

Unregistered securities aside, the SEC also accused AriseBank of outright fraud, including that it falsely stated that it purchased an FDIC-insured bank which enabled it to offer customers insured accounts. The SEC also said the company falsely claimed that customers could obtain an AriseBank-branded VISA card to spend any cryptocurrency holdings they had.

For the hat trick, the SEC added that AriseBank failed to disclose the criminal background of key executives. Although the SEC does not detail what those criminal convictions were, a quick Google search finds that both Jared Rice and Stanley Ford were linked with a scam called BitofGlory in 2014.

This isn’t the first time the SEC has taken action against an ICO, but it’s notable as being the first time it has sought the appointment of a receiver in connection with an ICO fraud. “We will use all of our tools and remedies to protect investors from those who engage in fraudulent conduct in the emerging digital securities marketplace,” said Steven Peikin, co-director of the SEC’s Enforcement Division.

Given the action taken here, ICO scammers are clearly on notice.

Image: AriseBank