Shambhavi SoniHighlights
- The person behind AriseCoin was sentenced by the US Department of Justice to five years in federal jail.
- CEO Jared Rice of AriseCoin designed a scheme that swindled over 4 million dollars investors.
- In March 2019, Rice, 33, plainly pleaded guilty to a securities count.
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The U.S. Department of Justice sentenced the person who was behind AriseCoin to five years’ federal jail for mastering an investment scheme of over $ 4 million.
On August 25 the US District Judge Ed Kinkeade also ordered the CEO of AriseBank, Jared Rice Sr. to pay $4,258,073 for restitution. First to report was CoinDesk.
The fraud.
Rix, 33, pleaded guilty to a securities count fraud in March 2019, making him, according to the department, one of the first individuals guilty of cryptocurrency securities fraud in the US federal court. In Texas, in 2018 he was arrested.
Rice claimed that AriseBank was the “first decentralised banking platform” worldwide based on AriseCoin’s proprietary digital currency, said the DOJ.
Rice tells investors to open Federal Deposit Insurance Corporation’s insured accounts and to use traditional banking services such as Visa-linked credit cards.
According to DOJ, Rice was not insured by FDIC and not a partner of Visa. The claims were false.
Nevertheless, hundreds of investors believed in him and bought AriseCoin for around $4,250,000 using digital currencies like bitcoin, ether, litecoin and fiat money.
Instead of putting them with his bank, Rice then secretly converted those funds for his own personal use, according to a DOJ. He invested the money in hotels, food, transport and a lawyer in family law.
Rice did not disclose, in connection with the internet-related business scheme, that he was found guilty of the 2018 felony charges.
The same year, Rice decided to initiate a civil action against AriseCoin’s fraudulent initial coin offer.
Fraud schemes in the cryptocurrency have grown as digital assets become more popular and fraudsters are becoming creative about how people swindle.
Some instances included fraudulent registrations of cryptocurrency domains, blockchains, investment schemes outside Europe and Elon Musk-impersonated criminals.