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U.S. SEC brings AriseBank ICO to a halt, alleges scam

The U.S. Securities and Exchange Commission (SEC) has halted an initial coin offering (ICO) drive conducted by AriseBank, alleging a scam and pointing out a number of misstated information by the company.

The SEC said that it has obtained a court order to halt the alleged fraudulent ICO. The token sale of “AriseCoin” began around December 26, 2017, and was originally scheduled to end on January 27, 2018, with distribution to investors on February 10, 2018 and aimed to “raise what it claims to be $600 million of its $1 billion goal in just two months”, the SEC said.

The SEC filed its complaint in the federal district court in Dallas on January 25. In the complaint, the SEC has alleged that AriseBank and its co-founders Jared Rice Sr. and Stanley Ford endorsed 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” and offered and sold unregistered investments in their purported AriseCoin token.

AriseBank used a number of wide-reaching strategies such as social media and celebrity endorsement to attract investors. According to the SEC, AriseBank falsely stated that it purchased an FDIC-insured bank which enabled it to offer customers FDIC-insured accounts and that it also offered customers the ability to obtain an AriseBank-branded VISA card to spend any of the 700-plus cryptocurrencies. In addition, AriseBank also allegedly omitted to disclose the criminal background of key executives.

“We allege that AriseBank and its principals sought to raise hundreds of millions from investors by misrepresenting the company as a first-of-its-kind decentralized bank offering its own cryptocurrency to be used for a broad range of customer products and services. We sought emergency relief to prevent investors from being victimized by what we allege to be an outright scam,” said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division.

The court approved an emergency asset freeze over AriseBank, Rice, and Ford and appointed a receiver over AriseBank, including over its digital assets. The SEC is seeking preliminary and permanent injunctions, disgorgement of ill-gotten gains plus interest and penalties, and bars against Rice and Ford to prohibit them from serving as officers or directors of a public company or offering digital securities again in the future.

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