AriseBank CEO Pleads Guilty To Securities Fraud

On Wednesday, March 20, Jared Rice the CEO of now-defunct AriseBank stood before a Texas judge and pled guilty to defrauding investors out of more than $4 million dollars, according to Dallas News. Rice is accused of making false claims about the amount of funds he acquired through an initial coin offering (ICO), the types of services his “bank” could offer, and his relationship with payment providers.

The saga of AriseBank started in January 2018, when the Texas Department of Banking issued a cease and desist order to the company. The Texas Banking Commissioner said that by using the term “bank” in its name, AriseBank was in violation of Chapter 31 since the company does not actually provide banking services in Texas. Even more problematically, the company promised “no risk returns” of 10 to 20 percent. The Texas Department of Banking concluded these claims were false, and the order was upheld.

Seemingly unfazed, while this was going on, AriseBank issued a press release claiming it had raised $600 million during its ICO and that it was “quickly approaching being the first $1 billion ICO.” This statement caught the attention of the US Securities and Exchange Commission (SEC), and on January 25, the regulator filed a complaint against AriseBank, Rice, and his business partner, Stanley Ford. The SEC claimed, among other things, that because the company failed to register with the SEC, its ICO was illegal. The SEC also stated that AriseBank falsely claimed it could now offer customers FDIC-insured bank accounts and transactions, and that it had entered into a partnership with Visa. The SEC said Rice also failed to tell investors that he was on probation for stealing and tampering with government documents.

Things only got worse for AriseBank when, on November 28, 2018, the FBI arrested Rice for some of the reasons outlined in the SEC’s complaint, specifically securities fraud and wire fraud. Just a few weeks later, a federal court ordered the alleged fraudsters to pay $2,259,543 in disgorgement, $68,423 in prejudgment interest, and a penalty of $184,767 each. Without denying or admitting guilt, the pair agreed to a lifetime ban from “serving as officers and directors of public companies and participating in digital securities offerings, and permanent prohibitions against violating the antifraud and registration provisions of the federal securities laws.”

According to Dallas News, Rice has now pled guilty to one count of securities fraud and admitted he lied to investors. Rice is set to be sentenced on July 11, 2019. Officials say he could face up to 20 years in federal prison and will probably be required to reimburse his investors.

Nathan Graham is a full-time staff writer for ETHNews. He lives in Sparks, Nevada, with his wife, Beth, and dog, Kyia. Nathan has a passion for new technology, grant writing, and short stories. He spends his time rafting the American River, playing video games, and writing.

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