The CEO of AriseBank has pleaded guilty to scamming $4.2 million from hundreds of investors. Jared Rice Sr. was initially looking at over 120 years behind bars for all the charges he faced. However, according to a report by Dallas News, he only faces 20 years for one count of securities fraud.
Rice had duped the clueless investors into giving him up to $4,250,000 to purchase AriseCoin cryptocurrency. In turn, he promised them guaranteed, no-risk returns of up to 20 percent, describing AriseBank as the world’s first decentralized bank. The investors purchased the AriseCoins using fiat currencies, bitcoin, ether and litecoin. At the time, Rice stated that AriseBank’s ICO had raised $600 million in weeks, falsely so.
The Dallas-based startup also told investors that it had partnered with Visa. From this partnership, the investors would get Visa-branded credit cards. However, it was later revealed that no such partnership was in place.
Moreover, AriseBank promised the investors that they would receive accounts insured by the Federal Deposit Insurance Corporation. The court documents show that the startup wasn’t FDIC insured and neither did it have the license to operate in Texas.
On his part, Rice admitted to scamming the investors and spending the money on personal needs. According to the report, he spent the money on his girlfriend, his lawyers, hotels, Uber rides and other such needs.
The U.S attorney for the Nothern District of Texas stated that this was an important landmark for the court. Erin Nealy Cox stated:
Given the fairly recent emergence of cryptocurrency, Rice’s guilty plea is one of the first of its kind in the U.S. We will not tolerate flagrant deception of investors, virtual or otherwise.
Rice will be back in court in July for the sentencing. Cox expects that the court will require him to reimburse all the investors he scammed. On her part, the closing of the AriseBank case is a fulfillment of a promise she made last year to fight crypto fraud.
Мy 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.
The plea is a landmark event for the justice department in the U.S. In the wake of the rise of cryptos and ICOs, many investors lost their money to unscrupulous entrepreneurs. These entrepreneurs baited them with the promise of unbelievable returns. This wasn’t to be, and hundreds of investors ended up losing their money.
The U.S government has been clamping down on such fraudulent crypto scams, with the FBI and Homeland Security assisting in investigations. And there have been plenty of cases for the elite departments to pursue.
According to a report by the Wall Street Journal in December last year, regulators in the U.S filed over 90 crypto-related cases in the last two years. However, out of all these cases, they recovered just $36 million. The regulators were also hyper-active when cryptos dipped in their prices compared to when the prices were skyrocketing.