The Dallas-based crypto startup AriseBank has been ordered to repay investors to the tune of $2.7 million to fix allegations that the firm was defrauding their investors.

Authorities have finally put an end to the ongoing AriseBank saga that has been hanging over the heads of the startup’s founders Stanley Ford and Jared Rice for almost a year.

Crypto Startup Fined by the SEC

According to the Dallas News, The U.S. Securities and Exchange Commission (SEC) ordered the AriseBank founders on Wednesday to pay back investors who believed that their money was to be used to create a cryptocurrency bank, which never actually came to fruition.

The crypto startup from Dallas, Texas, was planning their AriseCoin ICO to raise $1 billion, but was closed down in January by the SEC for rogue practices and allegedly lying to their investors.

The SEC had halted the ICO based on promises made by AriseBank as it claimed to have purchased a FIDC bank, which was found to be untrue. Other claims by AriseBank also turned out to be untrue. The director of the Fort Worth SEC office, Shamoil T. Shipchandler, came out in January to make a statement in regards to the alleged fraudulent activities of AriseBank by saying:

“Rice and Ford lied to AriseBank’s investors by pitching the company as a first-of-its-kind decentralized bank offering its own cryptocurrency for customer products and services.”

Repaying Investors to Avoid Jail

The SEC have ordered both Ford and Rice to pay back investors and have issued a lifetime crypto and ICO ban on the pair of rogue COOs. Although the pair has not admitted or denied the fraud allegations from the SEC, they have agreed to pay almost $2.6 million back to investors alongside a further $68,423 in interest.

Both Ford and Rice will be fined a further $184,767 apiece and have ensured the SEC that they won’t be taking part in any crypto-asset based fraud in the future.

AriseBank is one of the first crypto-based projects that have been targeted and sued by US regulators, which is setting a much-needed precedent.

2018 has been a monumental year for authorities finally catching up with crypto startup firms conducting fraudulent ICO activities. Although the true scale of the problem is finally coming to light, when potential investors hear that that $1 billion worth of crypto has been stolen this year alone, it has a dramatic negative knock-on effect to the rest of the industry which is thankfully being tackled.

Featured image from ETH News