Even if the SEC comes knocking…crypto criminals can still make out like bandits

From the ICO Ranker team

On November 28 of this year, federal prosecutors in Dallas announced the arrest of Jared Rice Sr., the CEO of AriseBank, on multiple counts of securities & wire fraud. Rice had allegedly managed to scam hopeful investors out of at least $4.25 million in a bogus ICO. And that was only one of the many high profile frauds in the news this year.

Here’s what you need to know about how fraudsters are still making crypto crime pay:

The exact amount raised by the AriseBank team may be impossible to determine. Generally, crypto transactions are traceable if you use a major coin like Bitcoin or Ether. If Rice converted any of the funds to a privacy coin, he would be able to freely spend that money at any time in the future.

Converting funds to a privacy coin would also allow Rice to lie about how much he raised, meaning he could face a lesser penalty from authorities who are unable to track his transactions.

Per a settlement with the SEC, Rice and his co-founder Stanley Ford agreed to a $2.7 million settlement, but it’s unclear whether they’ll get to keep the remaining funds. Rice does face potentially 120 years in jail.

The AriseBank case is the first time the SEC has sought the appointment of a receiver in connection with ICO fraud, meaning it’s getting wiser to crime in the industry.

Meanwhile, smaller ICO scams continue to fly under the radar. We recently reported on the Box of Data scam, in which scammers launched an ICO mimicking the token sale of a legitimate company. Nearly 80% of all ICOs conducted in 2017 turned out to be scams, and these hoaxes can be difficult to track, let alone recuperate investments from. The only real safety net for investors is their own due diligence.

Despite a wave of profitable frauds this year, the SEC continues to crack down on enforcement, so scammers will have to get more creative and possibly more subtle. We’re not expecting to see any more celebrity endorsers in the crypto space any time soon.

51% attacks, reorgs and double spends remain another threat to the crypto ecosystem. Read more about our take on that here.