SEC Cracking Down on CryptoCurrency Scam

The Securities and Exchange Commission (SEC) obtained a court order halting an allegedly fraudulent initial coin offering (ICO) that targeted retail investors to fund what claimed to be the world’s first “decentralized bank.” The complaint was filed in federal district court in Dallas, Texas on January 25th and was unsealed yesterday. AriseBank and its co-founders Jared Rice Sr. and Stanley Ford allegedly offered and sold unregistered investments in their AriseCoin cryptocurrency by depicting the bank as a decentralized bank offering a variety of products and services using more than 700 virtual currencies. The bank, based out of Dallas, also claimed it developed an algorithmic trading application that automatically trades in various cryptocurrencies. The complaint alleged that AriseBank falsely stated that it purchased an FDIC-insured bank which enabled it to offer customers FDIC-insured accounts and that it offered them VISA cards to spend on the 700 cryptocurrencies. AriseBank also allegedly failed to disclose the criminal background of its executives. The court has since approved an emergency asset freeze over AriseBank, Rice and Ford, and appointed a receiver over AriseBank, including its digital assets.