AriseBank CEO faces up to 120 years in prison over cryptocurrency scam

AriseBank CEO Jared Rice, Sr. faces a heavy prison term. He was arrested by the FBI on Wednesday and charged with defrauding hundreds of investors in a cryptocurrency scheme.

Rice, who is also the subject of a civil action filed by the SEC’s Fort Worth regional office earlier this year, was indicted on three counts of securities fraud and three counts of wire fraud.

According to court documents unsealed on Wednesday, Rice, 30, allegedly lied to would-be investors, claiming that AriseBank – which he labeled as the world’s “first decentralized banking platform” based on a proprietary digital currency called AriseCoin – could offer consumers FDIC-insured accounts and traditional banking services, including Visa-brand credit and debit cards, in addition to cryptocurrency services. In fact, AriseBank had not been authorized to conduct banking in Texas, was not FDIC insured, and did not have any sort of partnership with Visa.

Even as he touted AriseBank’s nonexistent benefits in press releases and online, Rice converted investor funds for his own personal use, spending the money on hotels, food, clothing, and a family law attorney.

He allegedly falsely claimed the “Initial Coin Offering,” or ICO, had raised $600 million within just a few weeks and failed to disclose that he’d plead guilty to state felony charges in connection with a prior Internet-related business scheme. Meanwhile, investors were buying AriseCoin using digital currencies like Bitcoin, Ethereum, Litecoin, and fiat currency.

If convicted, Rice faces up to 120 years in federal prison.

Earlier this month, Maksim Zaslavskiy pleaded guilty before United States Magistrate Judge Ramon E. Reyes, Jr. in federal court in Brooklyn to conspiracy to commit securities fraud in connection with two Initial Coin Offerings (ICOs) – REcoin Group Foundation, LLC (REcoin) and DRC World, Inc., also known as Diamond Reserve Club (Diamond). He faces prison term of up to five years.