Initial Coin Offerings, better known as ICOs, are excellent ways to raise funds for a determinate project, often offering people enticing opportunities to be a part of the ecosystem and earn profits with participation and involvement. However, and since regulations are not still 100 percent clear and consistent, users can fall victims of scams with frequency.

A US-based federal court has ruled that a couple of executives of a crypto project named AriseBank has to pay almost $3 million ($2.7, to be more precise) in fines. The announcement came this week, on December 12th, from the U.S. Securities Exchange Commission (SEC,) which is the organization in charge of dealing with crypto-related frauds.

SEC performed a long investigation on the matter, and with the backing of the US law, determined that AriseBank was operating a fraudulent ICO, which the SEC has fought long and hard to prevent in recent months.

Trickery and Deceit

Jared Rice, which is AriseBank’s CEO, initially tricked users and investors on the platform into thinking that it could offerthem “FDIC-insured accounts and traditional banking services, includingVisa-brand credit and debit cards, in addition to cryptocurrency services.”

Those allegations turned out to be false, and it all ended when Rice was apprehended by the Federal Bureau of Investigation (FBI) last month. The charges were described as defrauding investors of more than $4 million dollars.

Rice and his co-founder, Stanley Ford, will have to be responsible for $2,259,543 in disgorgement, and for an additional $68,423in prejudgment interest, not to mention $184,767 each, worth of civil penalties. They will not be able to offer digital securities anymore as part of their punishment, nor serve as officers of public companies, according to the terms of their legal fate.

Rice was in no position to offer banking services in the state of Texas, nor access FDIC insurance. Additionally, he did not have any alliances with financial services company Visa, effectively deceiving users in his ICO. Also, it was reported that the criminal also spent the money of his investors in personal affairs.

Similar Cases

The month of December also saw CoinAlphaAdvisors LLC, managed by the CoinAlpha Falcon LP fund, being punished by the law, as the SEC issued a cease and desist order as well as a 550,000 fine.

So far, the CoinAlpha Advisors LLC project had made more than $600,000, thanks to the contribution of 22 investors, which traded a proportional share of future profits generated by the fund’s investment in digital assets for limited partnership interests in it. As it turns out, the project was not registered under the SEC, which is a breach ofthe securities law in the United States.

Last month, crypto firm My Crypto Mine suffered a similar fate thanks to the action of the Securities Commissioner of the U.S.State of Texas, an organism that issued a cease and desist order against its owner, Mark Steven Royer. The issue read that Royer was “acting on behalf of a white-collar criminal [Bruce Bise] and disbarred attorney [Samuel Mendez], offered tokens that are now nearly worthless via a crypto investment schemedubbed “BitQyk.”

By Andres Chavez


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