AriseBank, self-described as being the home of the first digital asset bank with over 700 cryptocurrencies, has been accused of operating illegally, with no authorization to operate banking services in Texas, with no FDIC insurance and also no partnership with Visa despite offering its customers both FDIC-insured bank accounts and Visa-linked debit and credit cards.
The Justice Department is also accusing Rice of fabricating a story that he had raised USD 600 million in just a few weeks through an ICO earlier this year. It appears that Rice already has a checkered record, having already been sued by the SEC with his co-founder Stanley Ford for alleged fraud and issuing unregistered securities in another ICO. This resulted in the Texas Department of Banking serving a cease-and-desist order to AriseBank in January.
A court document revealed this week that Rice had been promoting the platform from around June last year through press releases, public video interviews, social media outlets and his own websites. Erin Nealy Cox, the US Attorney for the Northern District of Texas, said:
“My office is committed to enforcing the rule of law in the cryptocurrency space. The Northern District of Texas will not tolerate this sort of flagrant deception – online or off.”
Rice faces further charges arising from being on probation from an indictment in 2015 for theft and tampering with government records Collin County. He is also under an earlier felony indictment for assault in Dallas County, Texas. If convicted on the latest charge of fraud , Rice faces up to 120 years in federal prison, the Attorney’s Office said.
Another cryptocurrency trader, Joseph Kim, has been sentenced by the US Department of Justice to 15 months in prison, and the Commodities Futures Trading Commission (CFTC) has ordered Kim to pay USD 1.146 million of restitution after the rogue trader was found to have committed trading-related fraud over a period of six months, resulting in total losses of USD 1.146 million.
The SEC has currently tightened control over ICOs in the country with little or no new projects granted regulatory approval. While it is trying to open up to the process with a new FinHub that provides instant feedback regarding regulations on securities and securities offering, the SEC still maintains an iron fist on the proceedings with one of the toughest approval processes in the world.
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