Jared Rice and Stanley Ford, former executives of AriseBank, are now liable to pay $2,259,543 in disgorgement plus, $68,423 in prejudgment interest. The Securities Exchange Commission also ordered them to pay a $184,767 penalty.
The Securities and Exchange Commission (SEC) imposed these fees through an announcement on December 12. The decision was made after SEC found that AriseBank was operating a fraudulent ICO.
The U.S. Attorney’s office for the Northern District of Texas announced charges against Rice, who was arrested by the Federal Bureau of Investigation on November 28. During his arrest,
Rice deceitfully claimed that he offered customers of the bank, “FDIC-insured accounts and traditional banking services, including Visa-brand credit and debit cards, in addition to cryptocurrency services.”
The platform neither had any access to FDIC insurance nor a collaboration with Visa.
The claims by AriseBank, where to prove the legitimacy of the bank and it will offer FDIC insured accounts and traditional banking services; the claims turned out to be completely false.
Besides, to paying these penalties, the duo promised not to serve hierarchy positions for public entities moving forward or engaging in any offerings of digital securities. Barbara Lynn, Chief Judge of U.S District Court for the Northern District of Texas, announced these sanctions on Rice and Ford.
The duo managed to raise about $600,000 from 22 investors, which were mainly to cover Rice’s personal expenses.
The bank was based in Texas; nevertheless, the Texas Department of Banking issued a cease and desist order and demanded the closure, as it was not approved for carrying financial services in the state.
Moreover, the SEC issued an Investor Alert, warning the investors about the scams of companies that claim their involvement in Initial Coin Offerings (ICO).