The U.S. Securities Exchange Commission (SEC) stated that two former executives of AriseBank have been ordered in federal court to pay nearly $2.7 million in fine for allegedly running a fraudulent Initial Coin Offering (ICO). The ICO was stopped by the SEC in late January and it filed a complaint in federal district court in Dallas.
The federal court also prohibited the two executives – then-CEO Jared Rice Sr. and then-COO Stanley Ford – from serving as officers or directors of public companies or participating in future offerings of digital securities.
The executives were accused of offering and selling unregistered investments in their purported “AriseCoin” cryptocurrency. They also wrongly depicted AriseBank as a first-of-its-kind decentralized bank offering a variety of services to retail investors.
“The officer-and-director bar and digital securities offering bar will prevent Rice and Ford from engaging in another cryptoasset-based fraud,” said Shamoil Shipchandler, Director of the SEC’s Fort Worth Regional Office.
According to the order, Rice and Ford agreed to be held jointly and severally liable for $2,259,543 in disgorgement plus $68,423 in prejudgment interest, and each must pay $184,767 penalty.
They also agreed to lifetime bars from serving as officers and directors of public companies and participating in digital securities offerings, and permanent prohibitions against violating the antifraud and registration provisions of the federal securities laws.
Rice and Ford agreed to the settlements without admitting or denying the allegations in the SEC’s complaint.
In January, the SEC had halted and froze the assets of AriseBank for offering and selling unregistered investments in their purported “AriseCoin” cryptocurrency.
Texas Banking Commissioner Charles Cooper also issued a Cease & Desist Order relating to AriseBank, which claimed to be a “cryptocurrency bank”. The watchdog said the firm was violating law by using the term “bank” in its name and marketing materials to imply that it is in the business of banking.