The United States Securities and Exchange Commission (SEC) recently shut down a reportedly fraudulent initial coin offering (ICO) that was targeting retail investors in order to fund that it called the first “decentralized bank” in the world.
According to the complaint the SEC filed in a federal district court on January 25, AriseBank used dissemination tactics including a celebrity endorsement and social media to raise an alleged $600 million of their goal of $1 billion over two months.
The complaint stated that AriseBank and its co-founders Stanley Ford and Jared Rice Sr. were allegedly offering and selling unregistered investments in “AriseCoin”, their own form of cryptocurrency, by positioning the company as a unique decentralized bank that offered a number of services and consumer-facing products that use more than 700 different types of virtual currencies. On top of this, the company failed to disclose the fact that multiple key executives had criminal backgrounds.
AriseBank, Rice Sr., and Ford’s assets were frozen following court approval, and a receiver was appointed over the company, including over its digital assets. The SEC stepped in to prevent the digital assets from being dissipated, and enabled the receiver to secure the various cryptocurrencies held by the company, including Dogecoin, Bitshares, BitUSD, Litecoin, and Bitcoin. The public sale began on December 26, 2017 and was set to finish on January 27, and distribution to the investors was set to occur on February 10. The SEC is currently seeking bars prohibiting Ford and Rice Sr. from serving as directors or officers for public companies that offer digital securities in the future, preliminary and permanent injunctions, and disgorgement of any ill-gotten gains plus penalties and interest.
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