Acting United States Attorney for the Northern District of Texas Prerak Shah said today that the creator of digital currency AriseCoin was condemned to five years in jail for defrauding investors about $4 million.
In March 2019, AriseBank CEO Jared Rice, Sr., who resolved a civil case initiated by the SEC’s Fort Worth regional office in the previous year regarding AriseCoin, pled guilty to one count of securities fraud. U.S. District Judge Ed Kinkeade imposed his sentence on Wednesday, ordering him to spend $4,258,073 in restitution.
Mr. Rice, 33, admitted to lying investors, stating that AriseBank was the world’s “first decentralized banking platform” based on the proprietary cryptocurrency AriseCoin – could provide consumers with FDIC-insured accounts and traditional banking services, such as Visa-branded credit cards, in addition to digital currency services, as per his plea documents. In reality, AriseBank was not licensed to do banking in Texas, was not guaranteed by the FDIC, and had no affiliation with Visa.
Mr. Rice surreptitiously transferred investor funds for his private use while touting AriseBank’s bogus advantages, spending a fortune on hotels, meals, transportation, a family lawyer, and even a guardian. He also ignored to reveal that he had previously pleaded guilty to state felony charges linked to an internet-based business scheme.
In the meantime, hundreds of investors purchased AriseCoin for $4,250,000 using both digital and fiat currencies, including Bitcoin, Ethereum, and Litecoin.
The inquiry was carried out by the Dallas Field Office of the Federal Bureau of Investigation. The prosecution was done by Assistant US Attorneys Mary Walters, Sid Mody, and Erica Hilliard.