FBI Arrests AriseBank CEO for $4 Million Crypto-Related Fraud - Bitsonline

FBI Arrests AriseBank CEO for $4 Million Crypto-Related Fraud

The Federal Bureau of Investigation (FBI) has arrested Jared Rice Sr, CEO of the self-proclaimed “cryptocurrency bank” AriseBank, for allegedly swindling millions of dollars from naive investors. Rice is being accused of multiple counts of securities fraud.

Also read: Chinese Mining Operations Reportedly Closing Due to Crashing Crypto Markets

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Promoting Fake Cryptocurrency Bank

According to the press release from the U.S. Attorney’s Office of the Northern District of Texas, 30-year old Rice is accused of defrauding hundreds of investors by operating a fraudulent cryptocurrency investment scheme.

Reportedly, Rice raised over $4 million USD from unwary investors by marketing AriseBank as the “first decentralized banking platform”, promising to offer both traditional banking services and crypto services in relation to its proprietary token–AriseCoin.

As part of its traditional services, Rice falsely claimed that AriseBank would offer Federal Deposit Insurance Corporation (FDIC) insured bank accounts and Visa-endorsed debit and credit cards.

But in reality, AriseBank never had the permission or licenses to conduct banking services nor did it have FDIC insurance. In fact, the fake cryptocurrency bank even had no affiliation with global payments processor Visa.

Rice to Pay the Price

To attract more investors to the sting, Rice claimed to have raised $600 million in just a matter of weeks from AriseCoin’s initial coin offering campaign. Falling for the cryptocurrency con, hundreds of investors bought into AriseCoin. Moreover, the conman is also accused of concealing his prior criminal charges whereby he pleaded guilty of masterminding an internet-related business scheme.  

Meanwhile, the press release states that the accused Rice has squandered investor funds for personal leisure. Rice has been charged with three counts of securities fraud and wire fraud violations. If proven guilty, he faces 120 years in federal prison.

The U.S. Attorney for the Northern District of Texas Erin Nealy Cox said:

“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.”

AriseBank Texas

Tale of AriseBank’s Fraudulent Activities

Earlier in January, the state’s financial regulator, the Texas Department of Banking, barred all services of AriseBank in the state by issuing a cease and desist order. The order was issued as AriseBank was promoting banking services without obtaining authorization from any government agency.  

A press release from the department stated:

“The Cease & Desist Order was based on the Commissioner’s finding that AriseBank violated Texas Finance Code Chapter 31 by using the term “bank” in its name and marketing materials to imply that it is in the business of banking in this state.”

In the same period, U.S. financial watchdog, the Securities and Exchange Commission (SEC), sued AriseBank for issuing unregistered securities. At the time, AriseBank co-founder Rice stated that the SEC and FBI raided company offices and seized funds raised during the ICO. AriseBank avowed to amass over $1 billion through private and public token sales.

Texas has a storied history of taking on cryptocurrency scams. Earlier this year, the Lone Star state issued four cease-and-desist letters to digital currency ventures within a month. The Texas State Securities Board has been active in advising residents to look out for potential scams.

Is the era of fraudulent crypto scams over? Share your views in the comments section below.


Images via Pixabay, Volk Field

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