Rather to develop a product with raised funds, a blockchain based startup used it to afford the luxury lifestyle. A former CEO of AriseBank, Jared Rice has reportedly used $4million by defrauding investors and used to pay for hotels, food, and clothes. In addition, the fund has also used to appoint a family lawyer.
The website claims that (Presently not working);
“The first decentralized bank to offer the first and largest cryptocurrency banking platform in the world,” and said its software could allow users to “serve as their own bank
Reports revealed that the AriseBank had completed its funding round and found operating banking activities with the native token called “AriseCoin”. Rice claimed that in early 2018, the bank had raised $600 million through ICO which is a fraudulent claim according to law prosecutors. Though, after three months of ICO, US Securities and Exchange Commission (SEC) halted its crowdfunding event following that AriseBank has violated registration and other provision of securities law.
However, instead of acting as the central exchange, AriseBank is said to allow people to hold, send, buy, sell and spend virtual assets right from their computer or mobile devices. Moreover, the platform was also accepting ETH, BTC, and LTC in exchange for AriseCoin.
AriseBank had promised to offer multiple services across crypto space including consumer FDIC-insured accounts as well as the traditional banking services which also comprises of the credit and debit cards. On his arrest by FBI on Wednesday, the regulators have investigated and claimed that the bank had no compliance with the US Federal Deposit Insurant Act and not been allowed to run any banking activities in Texas. Moreover, there was no agreement with Visa in place.
As stated by Erin Nealy Cox, US Attorney of Northern District of Texas,
“The Northern District of Texas will not tolerate this sort of flagrant deception – online or off.” Continuing “My office is committed to enforcing the rule of law in the cryptocurrency space,”
What’s your opinion to protect the interest of investors from such scams?
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