Court filings show cryptocurrency bank is being charged with offences relating to a recent Initial Coin Offering (ICO) for its own AriseCoin.
AriseBank, along with its founders Jared Rice Sr. and Stanley Ford, is being targeted by U.S. financial watchdog the Securities and Exchange Commision (SEC), which alleges it has committed fraud and issued unregistered securities. The complaint, according to reports, was filed Jan 25th – just prior to a cease-desist-order being slapped on the bank’s operation by Texas’ own Department of Banking.
AriseBank claims to have raised something in the region of $1billion in respect to AriseCoin, for which it touted the endorsement from former Heavyweight champion boxer Evander Hollyfield as part of a combative, somewhat prescient, PR campaign that encouraged potential investors to “Join the biggest fight in history“. Now, it appears that the first blows in that fight have been landed, with the SEC alleging that AriseCoin falls under its purview because AriseBank accepted investment from beyond the borders of the United States, and that both AriseBank and its nascent cryptocurrency has thus violated its regulations by not registering with it.
Beyond these breaches of protocol and procedure, the SEC also appears to allege that AriseBank made false statements to investors relating to claims that AriseBank intended to purchase two banks that were insured by the US Federal Deposit Insurance Corporation. The claim of such purchases implied a certain amount of legitimacy, consumer protection and even deposit insurance for investors, however the SEC alleges that neither of two entities AriseBank named (KFMC Bank Holding Company, and TPMG) are actually FDIC-registered.
AriseBank has long contested the SEC’s right to get involved, as far back as October last year it was refuting the SEC’s critique of its business, which makes it look like it was always planning to put up a fight.
For it’s part, the SEC said:
“Because of the ongoing nature of the fraudulent offering and risk of asset dissipation, the SEC seeks emergency relief – including temporary restraining orders, asset freezes, and the appointment of a receiver over AriseBank.”
So it looks like this one will see its day in court.