An initial coin offering (ICO) has been found to be a scam. The Securities and Exchange Commission (SEC) is always looking for ways to fight scams involving ICO and their latest action has been to fully cut off AriseCoin tokens from the ICO offered by AriseBank. All assets of AriseBank and the business’ co-founders have also been frozen. This is the latest action by the SEC’s enforcement division to combat ICO scams.
“We allege that AriseBank and its principals sought to raise hundreds of millions from investors by misrepresenting the company as a first-of-its-kind decentralized bank offering its own cryptocurrency to be used for a broad range of customer products and services. We sought emergency relief to prevent investors from being victimized by what we allege to be an outright scam.”
Cease and Desist Order from the Texas Department of Banking
Just recently, AriseBank had claimed to have raised over $600 million through the ICO. They also stated that they are the first true “decentralized bank”. SEC, however, alleges that doing so is in violation of various federal securities laws, as it involves offering unregistered, fraudulent, and illegal securities.
A short while before, the Texas Department of Banking had issued a cease-and-desist order against AriseBank, which is based in Texas. The SEC court order is a continuation of this. The cease-and-desist order was issued to stop AriseBank from stating that it was a Texas bank, offering banking and financial services to residents of the state.
Endorsement of the ICO by Evander Holyfield
Of interest is the fact that the ICO by AriseBank had received an official endorsement from Evander Holyfield. The boxing champion is not currently listed in the SEC court order. However, in November 2017, the SEC had already cautioned promoters and celebrities about the fact that their endorsements could be unlawful. For these to be legal, they would have to offer full disclosure in terms of what they received in return of their endorsement. Failing to do so could be in violation of a range of federal laws.
The issue with Evander Holyfield is more complex, however. His role with AriseBank was to help raise funds for disaster relief and preparedness. However, when the cease-and-desist order was issued, all of that were stopped.
Federal Authorities Raided the Homes of AriseBank Co-Founders
Meanwhile, the co-founders of AriseBank have had their homes raided, the company’s website has been taken down, all assets have been seized, and the ICO itself has been stopped in full. What this could mean for Holyfield remains unclear.
“Holyfield plans on using cryptocurrency to fund humanitarian disaster preparedness. Together we will raise a million dollars for disaster-related causes and then grow it to a billion-dollar endowment using the Bitshares Endowment model created by the Billion Hero Campaign. Holyfield’s endowment, as well as the original Billion Hero Endowment are hosted on BillionHeroCampaign.com.”
The SEC meanwhile, has gone so far as to refer to AriseBank’s ICO offering as an outright scam, which is a very serious accusation.
“The SEC obtained a court order to freeze the assets of AriseBank and its founders and to stop the company’s initial coin offering (ICO), a trendy way to raise money in which companies distribute cryptocurrency tokens to investors in exchange for cash. (Slate reached out to AriseBank for comment but had not received a response at the time of publication.)”
The founders of AriseBank are Jared Rice Jr., a 29 year old man from Dallas, and Stanley Ford, a 45 year old man who is currently believed to be living in Dubai, although he has been known to have resided in Dallas as well. Rice in particular has quite a shady and concerning background.
“According to the SEC, Rice was “charged with felony theft and tampering with government records” in 2015. He pled guilty and is still on probation for those charges, the SEC says. Rice has been dogged by accusations of fraud in the past.”