The Federal Bureau of Investigation (FBI) has arrested on November 28 AriseBank CEO Jared Rice Sr., charging him with six counts securities and wire fraud. Rice has allegedly swindled investors out of more than $4 million via a cryptocurrency scam that promised federally insured accounts and brand-name credit cards.
The regional office of the U.S. Securities and Exchange Commission (SEC) located in Fort Worth, Texas earlier this year received an emergency court order putting a halt to AriseBank’s initial coin offering (ICO) for the virtual currency AriseCoin, which Rice fallaciously declared had raised $600 million. The court filing stated that Rice purportedly lied to investors, telling them that the bank, which he boasts as the “first decentralized banking platform,” can provide customers FDIC-insured accounts alongside traditional banking services like Visa-brand credit and debit cards.
U.S. District Attorney for the Northern District of Texas Erin Nealy Cox says that AriseBank is not FDIC insured. Cox adds that the embattled bank also does not have the authority to conduct banking operations in Texas nor does it have an official partnership with Visa.
Through online postings and press releases, Rice has promoted AriseBank’s purportedly “non-existent” benefits while investor funds are being squandered on hotel accommodations, clothes, meals, Uber rides, a family law attorney, and guardian ad litem. Prosecutors also allege that Rice spent the funds on his girlfriend.
Rice has been able to raise around $4.25 million from investors who purchased into AriseCoin using fiat currency, Bitcoin, Ether, and Litecoin funds between June 2017 and January 2018.
Rice has also failed to inform investors that he had earlier pled guilty to state felony charges for tampering with government records, forging a Texas Secretary of State Incorporation document, and fleecing funds in a previous internet business scam. The beleaguered CEO is currently on probation for these said offenses.
Meanwhile, Cox states:
“My office is committed to enforcing the rule of law in the cryptocurrency space. The Northern District of Texas will not tolerate this sort of flagrant deception — online or off.”
If convicted, Rice faces up to 120 years behind bars. Mary Walters and Sid Mody, assistant U.S. attorneys, will be prosecuting the case while a trial date has yet to be released.