The United States Securities and Exchanges Commission (SEC) has obtained an emergency asset freeze over AriseBank and its co-founders Jared Rice Sr. and Stanley Ford. The federal district court in Dallas, Texas, has further appointed a receiver over AriseBank, including over its digital assets.
SEC says AriseBank, which claimed to be the world’s first decentralized bank, “used social media, a celebrity endorsement, and other wide dissemination tactics to raise what it claims to be $600 million of its $1 billion goal in just two months.”
SEC further alleges that “AriseBank falsely stated that it purchased an FDIC-insured bank which enabled it to offer customers FDIC-insured accounts and that it also offered customers the ability to obtain an AriseBank-branded VISA card to spend any of the 700-plus cryptocurrencies. AriseBank also allegedly omitted to disclose the criminal background of key executives.”
AriseBank issued a clarification and correction on January the 25th, stating:
“Arise gives people the freedom to hold, send, receive, buy, sell and spend cryptocurrency directly from their computer or mobile device. This means that AriseBank cannot and will not ever control the money of its users.
People maintain their own stock of cryptocurrency holdings and any user may hold, send, receive, buy, sell and spend them, when needed.
Because of the decentralized nature of the AriseBank software, it is wholly unnecessary for the platform to be FDIC regulated or insured as the individual users maintain full control of their funds.”
In effect admitting their previous press release was highly misleading as they state: “AriseBank can now offer its customers FDIC-insured accounts and transactions, and gain a strong backing for crypto aTMs™”
SEC says they “intervened to protect the digital assets before they could be dissipated, enabling the receiver to immediately secure various cryptocurrencies held by AriseBank including Bitcoin, Litecoin, Bitshares, Dogecoin, and BitUSD,” but do not state whether they now control the full amount invested.
Rice’s Texas house was raided a few days ago by US authorities with Steven Peikin, Co-Director of the SEC’s Enforcement Division, stating:
“This is the first time the Commission has sought the appointment of a receiver in connection with an ICO fraud. We will use all of our tools and remedies to protect investors from those who engage in fraudulent conduct in the emerging digital securities marketplace.”