The FBI agents arrested the CEO of AriseBank on Wednesday after an indictment for fraud. Jared Rice, Sr. allegedly ran the AriseCoin cryptocurrency scam that fleeced investors of over $4.25 million. This is according to an announcement by Erin Nealy Cox, the U.S. Attorney for the Northern District of Texas.
Interestingly, Mr. Rice was already a defendant in a civil action brought to court by the SEC. The lawsuit, filed earlier this year specifically sought restraining orders to stop Rice from running an initial coin offering (ICO).
According to court documents, the SEC indicted Rice for three counts of fraud. Particularly, Rice and his co-accused touted their bank as decentralized. Further, they knowingly misled the would-be investors into believing that AriseBank offered crypto-focused services and products. This would include support for cryptocurrencies over and above 700.
This willful misinformation also included a claim that the bank “focused on bringing cryptocurrency to the average consumer and using it to revolutionize banking.”
As part of the plan, AriseBank and its associates began pooling funds from late 2017 when cryptocurrency was flying high. To make the plan elaborate enough, the defendants offered an ICO to spearhead the campaign.
AriseCoin cryptocurrency scam pooled over $4.25 million
Dubbed AriseCoin, the securities offering would have its own virtual currency with the name AriseCoin. By the time the Securities and Exchange Commission (SEC) filed the lawsuit, the ICO claimed more than $600 million funding.
According to the court documents, the ICO would conclude in late January. Allegedly, investors who bought in the ICO would receive AriseCoin cryptocurrency in their wallets by mid-February.
However, the FBI took the mastermind in custody Wednesday after re-opening the case. According to local media outlet, Rice defrauded hundreds of investors of more than $4.25 million between mid-2017 and January 2018.
Speaking after carrying out the arrest, Nealy Cox said that his office will stop at nothing to enforce the law. Particularly, his focus is on the crypto sector with cases like the AriseCoin cryptocurrency scam.
Mr. Rice could spend more than a decade in prison if found guilty.