By: redpill | 01-30-2018 | News
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SEC Halts Crypto "AriseCoin" ICO Claiming AriseBank Swindled $600 Million

A new report from the Securities and Exchange Commission has shut down the Initial Coin Offering (ICO) in what the SEC alleges is an over-half billion dollar swindling scam.

Many claims made by AriseBank were apparently false, such as that they were chartered in the state of Texas and authorized to operate. AriseCoin has now crumbled under the pressure, leaving those who invested caught in the wind without an anchor.

<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">AriseBank got caught selling an alleged ICO to investors and the SEC<br>shined a light and put a stop to the fake scheme <a href=""></a></p>&mdash; SEC Enforcement (@SEC_Enforcement) <a href="">January 30, 2018</a></blockquote>

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Investors have already dumped over $600 million into the ICO, with the Dallas-based AriseBank having a goal of a billion dollars total. In two months, they've achieved well over 60% of the goal, but the SEC says they scammed investors to reach it.

The SEC claims AriseBank used "social media, a celebrity endorsement, and other wide dissemination tactics" in order to manipulate investors.

<h4>The SEC issued the following<a href="">press release:</a></h4>

<blockquote>"AriseBank and its co-founders Jared Rice Sr. and Stanley Ford allegedly offered and sold unregistered investments in their purported "AriseCoin" cryptocurrency by depicting 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. AriseBank's sales pitch claimed that it developed an algorithmic trading application that automatically trades in various cryptocurrencies."</blockquote>

<blockquote>"The SEC alleges that 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. AriseBank also allegedly omitted to disclose the criminal background of key executives."</blockquote>

"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.

"This is the first time the Commission has sought the appointment of a receiver in connection with an ICO fraud. We will use all of our tools and remedies to protect investors from those who engage in fraudulent conduct in the emerging digital securities marketplace," said Steven Peikin, Co-Director of the SEC's Enforcement Division.

Shamoil T. Shipchandler, Director of the SEC's Fort Worth Regional Office, said, "Attempting to conceal what we allege to be fraudulent securities offerings under the veneer of technical terms like ‘ICO' or ‘cryptocurrency' will not escape the Commission's oversight or its efforts to protect investors."

This isn't the first ICO to be shut down by the SEC, who's seemingly engaged in a war against Independent Coin Offerings and crypto in general, with many partnering nations to the United States<a href=""> such as Japan </a>taking measures on their own after the Coincheck hack.

Just a week ago, Coindesk reported the<a href=""> Texas Department of Banking </a>made headlines of its own in the world or crypto after the government agency sent a<a href=""> cease-and-desist letter </a>to AriseBank and barred the cryptocurrency platform entirely in its state.

The Texas Department's Banking Commissioner Charles​ ​G.​ ​Cooper said, "The firm has been promoting and offering banking services while not chartered or authorized to engage in banking in the state, and is ‘not supervised by or registered with any Texas or federal regulatory agency.'"

Now it seems the SEC has decided to issue their own formal shutdown, strategically placing an end to the growing competition from another ICO.

The SEC's investigation was conducted by David Hirsch and supervised by Jessica Magee and Eric Werner in the Fort Worth Regional Office in coordination with the Enforcement Division's Cyber Unit.

The litigation against AriseBank is being conducted by Timothy Evans, Christopher Davis, and Mr. Hirsch, and supervised by B. David Fraser.

"The SEC appreciates the assistance of the Federal Bureau of Investigation, U.S. Attorney's Office for the Northern District of Texas, Federal Deposit Insurance Corporation, U.S. Patent and Trademark Office, and Texas Department of Banking," their website states.

Investors in the AriseBank ICO who believe they may be a victim are also being asked to report it to the<a href=""> SEC as a tip or complaint</a>.

Jared Rice Sr. claimed the FBI raided his home and the Securities and Exchange Commission seized all the firm's assets.

This report has been not been officially acknowledged by the government, although<a href=""> American Banker </a> did take statements from Rice in an interview.

"The FDIC does not like us, as you can imagine," he said. "We're not on good terms, they're doing everything they can to stop this," said Rice. "They've hired an army of people to take every skeleton out of my closet, put them on the internet, put pictures of my children all over the internet."

He had no proof the FDIC had done this, he said. "But nobody else would have done it like this. This is way too strategic."

It looks as if AriseBank is finished, leaving many to ask who is next in the SEC's crosshairs.

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