On Wednesday, Jared Rice, Sr., the creator of the cryptocurrency AriseCoin, was sentenced to five years in federal prison in Texas after pleading guilty to scamming investors out of $4.25 million.
Rice, who is also the CEO of AriseBank (which bills itself as the world’s “first decentralized banking platform,” was ordered to pay restitution in the amount of the cash invested in the business.
According to court documents, he admitted lying to investors by suggesting that the AriseBank platform could supply clients with FDIC-insured accounts and typical banking services such as Visa-branded credit cards.
AriseBank, on the other hand, was not permitted to provide banking services in Texas; it was not FDIC insured, and it had no affiliation with Visa.
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Furthermore, attorneys established that Rice spent investor monies on personal expenditures such as lawyers, hotels, and travel rather than investing the funds in AriseBank.
According to court filings, the AriseCoin creator also failed to disclose to investors a prior conviction for state felony charges linked to a previous “internet-related business scheme.”
In the dock are ICO promoters.
The case is the latest example of authorities coming down on the creators of crypto scams, many of which were launched during the 2017 ICO boom.
John McAfee, a tech entrepreneur and antivirus software creator, was discovered dead in his prison cell in July after being charged with tax evasion, money laundering, and fraud. McAfee was charged by US lawyers of conducting a “pump-and-dump” operation and unlawfully promoting ICOs over social media.