Jared Rice Sr., AriseBank CEO, faces a possible prison sentence after defrauding hundreds of investors of over $4 million. On November 28th 2018, the United States Department of Justice announced that Rice was indicted on three counts of securities fraud and three counts of wire fraud. If convicted, Rice faces up to 120 years in federal prison.
Details of AriseBank CEO’s Alleged Fraud and Potential Prison Sentence
30-year-old Jared Rice is the man behind the so-called ‘decentralized’ AriseBank and its associated cryptocurrency, AriseCoin. Last Wednesday, Rice was arrested by the FBI after a long investigation that so far, has resulted in charges including defrauding investors of more than $4 million.
Jared Rice Sr., prior to his recent arrest
According to legal documents released just last week, Rice allegedly lied to his investors during AriseBank’s Initial Coin Offering (ICO). Rice told prospective investors that Texas-based AriseBank was the world’s “first decentralized banking platform” which could offer consumers FDIC-insured bank accounts.
He also claimed that the platform provided traditional banking services such as Visa credit and debit cards.
The recent investigation however, suggests the opposite. According to the US Attorney’s Office, AriseBank had never received authorization to perform any banking activity in Texas, was not FDIC-insured, and never had a partnership with Visa.
In fact, Rice allegedly used some of his investors’ funds generated during the ICO in various personal spending sprees. The Texas-based prosecutors claim the following:
“Even as he touted AriseBank’s nonexistent benefits in press releases and online, Mr. Rice quietly converted investor funds for his own personal use, spending the money on hotels, food, clothing, a family law attorney, and even a guardian ad litem.”
A recent mugshot of Jared Rice Sr
The most shocking aspect of the emerging case concerns the total dollar amount raised during AriseBank’s ICO.
While Rice’s charges include just $4 million worth of fraud, his company’s ICO raised $600 million in a matter of weeks.
During that time span, Rice never disclosed that he had previously plead guilty to “state felony charges in connection with a prior internet-related business scheme”.
The Implications of Regulatory Enforcement for Cryptocurrencies Explained
In recent months, the larger cryptocurrency community has witnessed a wave of increased regulatory activity.
Meet Tim. Tim is a co-founder of The Tokenist. Originally from Kalamazoo, Michigan, Tim is a mechanical engineer by training and has been investing his whole life. He started his career with GE in engineering and operations management where he held various leadership roles before leaving to pursue an MBA (he is a proud former co-chair of the Milton Friedman Group at Chicago Booth). After business school, Tim spent several years with Baird Capital where he made private equity investments in consumer and industrial companies. He left Baird to found Protective Technologies Capital in 2018, where he continues to make private equity investments in family businesses looking for help with succession planning. Tim lives in Chicago, where he enjoys watching Michigan football and basketball and traveling with his wife Kristen. Like Sia, he also likes telling jokes. However, his wife adamantly insists that he not share his “dad jokes” publicly so he reluctantly sticks to writing about finance and technology.