Crypto fraudsman gets jail time

The man behind a fraudulent initial coin offering (ICO) has been sentenced to five years in prison for securities fraud.

The former CEO of AriseBank, Jared Rice Sr. — whose company touted itself as the world’s first decentralized banking platform — previously pled guilty to one count of securities fraud after admitting that he lied to investors who dumped about US$4.25 million into its proprietary cryptocurrency, AriseCoin.

According to U.S. authorities, Rice claimed that the company could offer traditional banking services, credit cards and insured deposit accounts, alongside crypto products.

“Even as he touted AriseBank’s nonexistent benefits, Mr. Rice quietly converted investor funds for his own personal use,” authorities said, adding, “He also failed to disclose that he’d plead guilty to state felony charges in connection with a prior internet-related business scheme.”

Today, Rice was sentenced to five years in federal prison and ordered to pay US$4.25 million in restitution.

Back in 2018, Rice and the company’s then-chief operating officer, Stanley Ford, were also charged by the U.S. Securities and Exchange Commission (SEC) in connection with the fraudulent ICO.

In settling with the SEC, they were ordered to pay nearly US$2.7 million, and they agreed to lifetime bans from serving as directors or officers of public companies, as well as to a ban on participating in future offerings of digital securities.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.