Dallas: Crypto Firm Arrested by FBI for $4 Million Fraud
The FBI has arrested the CEO of Dallas-based AriseBank on November 28, 2018, reports Dallas News. The arrest was made after allegations of company CEO, Jared Rice Sr. duping hundreds of investors out of more than $4 million. Reportedly, Rice had tricked the investors into a ponzi cryptocurrency scheme, promising them federally insured accounts and VISA approved crypto credit cards.
CEO’s Questionable Past
This isn’t the first instance that Rice is on crossroads with the law. Earlier this year, Rice, along with his co-founder Stanley Ford, was the subject of a civil action filed by the U.S. SEC’s Fort Worth regional office, in which AriseBank’s ICO was abruptly stopped from issuing unregistered securities. Soon after, the Texas Department of Banking issued a cease-and-desist order against AriseCoin.
After the arrest by the FBI, Rice has been indicted on a total of six counts; three of which relate to securities fraud and the remaining three to wire fraud.
Per the court documents unsealed on November 28, Rice lied to the unsuspecting investors, claiming that AriseBank would offer them FDIC-insured accounts and banking services. He falsely claimed that the company’s ICO had raised $600 within a few weeks. Consequently, investors fell for his fraud and bought AriseCoin using cryptocurrencies like bitcoin, ether, and litecoin.
Allegedly, he went on to claim that AriseBank is the world’s “first decentralized banking platform” powered by its native crypto token, dubbed AriseCoin.
However, in reality, AriseBank did not have the required legal permission to conduct banking business in Texas. Further, the bank was neither FDIC insured, nor had any partnership with VISA.
While Rice created an impressive online image of AriseBank by regularly publishing press releases and expanding the alleged project’s social reach, behind the scenes he quietly spent investor’s funds for personal use, including hotel payments, food, clothing, a family law attorney, and a guardian ad litem. Notably, Rice could face up to 120 years in prison if convicted on all six counts levied against him.
Erin Nealy Cox, U.S. Attorney for the Northern District of Texas, said:
“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.”
With no firm regulations in place in the crypto space, the wrongdoers continue to prey on innocent people putting their wealth in jeopardy.
BTCManager reported on October 22, 2018, how the SEC ordered a crypto ponzi scammer to pay $2.5 million for tricking investors by providing them false financial reports regarding the profitability of his New York-based company.