Crypto CEO Scams Investors Out of $4 Million
The CEO of AriseBank was taken into custody by the FBI for stealing over $4 million from hundreds of investors. The cryptocurrency scheme that was launched by AriseBank was a shady cryptocurrency scheme that faked the promise of brand name credit cards and federally insured accounts.
Jared Rice Sr., the CEO was indicted on three counts each of wire fraud and securities fraud. This information was revealed by Erin Nealy Cox, U.S. Attorney for Northern Texas district.
Earlier in 2018, the Securities and Exchange Commission’s (SEC) office received an emergency court order to stop AriseBank’s initial coin offering (ICO) which had claimed to raise $600 million until then.
The indictment accuses Rice of making false claims that his company, AriseBank would offer FDIC-insured accounts, traditional banking services, banking services, and cryptocurrency services. He said that his company is the world’s first decentralized banking platform which is based on AriseCoin, a proprietary digital currency.
It was later revealed that AriseBank did not have any authority to carry out banking services in Texas. They were also found to be lacking FDIC insurance and there was no partnership with Visa.
Rice pitched the false promises of his company by means of press releases and online publishing and accumulated millions of dollars. He then proceeded to convert these funds for personal use. This included food, clothing, hotel accommodations, and more. He also reportedly spent these funds on his girlfriend.
He was successful in raising $4.25 million from various investors in cryptocurrencies such as Bitcoin, Litecoin and Ethereum between June 2017 and January 2018. The investors were tricked into believing that they were buying the unreleased AriseCoin.
If Rice is convicted on all six counts, he can face up to 120 years of federal prison time.