The FBI has arrested the CEO of a crypto bank on charges of embezzlement of around $4 million raised from investors through AriseBank’s ICO.

The United States Attorney’s Office of the North District of Texas announced on Wednesday (November 29th) that it had arrested Jared Rice Sr., the CEO of a crypto bank, AriseBank, on charges relating to the defrauding of more than one-hundred investors of over $4 million through the company’s ICO. The charges consist of three counts of securities fraud and three counts of wire fraud.

Rice claimed that AriseBank was the world’s “first decentralized banking platform,” but inflated claims about its credibility, stating that it would be able to offer Visa-supported credit and debit cards as well as accounts insured by the Federal Deposit Insurance Corporation (FDIC). In reality, the bank was able to offer neither of these things and did not even have the necessary legal authorization to do business in the state of Texas.

$600 Million in a Few Weeks

Rice’s inflations of the truth continued. Through AriseBank’s ICO, Rice claimed the start-up had raised funds in excess of “$600 million within just a few weeks” whilst in fact raising nowhere near as much. At the same time, he was spending investor cash on hotels, food and clothes.

A sealed indictment published last week explains that Rice began offering the bogus AriseCoin and promoting AriseBank through social media in June of 2017, as well as through the firm’s website. This promotion helped him get hundreds of investors on board and raise millions of dollars’ worth of capital. As the charges stand, Rice could face a 120-year jail sentence, in federal prison if convicted.

“Committed to Enforcing the Rule of Law – Online or Off”

But this is all part of a trend; Rice has been on the wrong side of the state since the beginning of the year. In January the SEC announced they were suing him along with his partner at AriseBank, Stanley Ford for alleged fraud through the issuing of unlicensed securities through their ICO after which a cease and desist order was issued.

On the subject of AriseBank’s fraud, Erin Nealy Cox, the U.S. Attorney for the Northern District of Texas, stated:

“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.”

Furthermore, all of this comes framed against Rice’s known history as a petty offender, for which he is under indictment form Dallas County for assault charges, as well as attempting to tamper with evidence; Rice allegedly stole the victim’s phone in an attempt to delete an audio recording which was on there, incriminating him.

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