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In a press release by the Department of Justice, U.S. Attorney for the Northern District of Texas Erin Nealy Cox announced that the FBI has arrested one Jared Rice, Sr. last Wednesday on the charges of ‘duping hundreds of investors out of more than $4 million in a cryptocurrency scheme’.
Mr. Rice was indicted on three accounts of securities fraud and three counts of wire fraud. This is not his first encounter with the law either as he had plead guilty to state felony charges in connection with a prior internet-related business scheme. He also failed to disclose this information to would be investors when pitching his plans for his cryptocurrency AriseCoin. Moreover, Mr. Rice is also the subject of a civil action filed by the SEC’s Fort Worth regional officer earlier this year.
According to court documents that were unsealed on Wednesday, the culprit told a number of lies to his potential investors and withheld crucial information that might have dissuaded them from investing. According to the press release by the Justice Apartment, “[Mr.Rice] claimed that AriseBank – which he billed as the world’s first decentralized banking platform based on a proprietary digital currency called AriseCoin – could offer consumers FDIC-insured accounts and traditional banking service, including Visa-brand credit and debit cards, in addition to cryptocurrency services. In actuality, AriseBank had not been authorized to conduct banking in Texas, was not FDIC-insured and did not have any sort of partnership with Visa.”
While he touted the nonexistent benefits of AriseBank, Mr. Rice continued to convert the obtained investments for his own personal use. He spent this money on hotels, food, clothing, a family law attorney and even a guardian ad litem. He falsely claimed that the ICO for AriseCoin had secured investments of $600 million over the course of a few weeks.
Nealy Cox was also quoted saying that her 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 of off,” she stated. It is also important to note that if convicted, Mr. Rice faces up to 120 years in federal prison.
Cryptocurrencies have seen a downtrend all through 2018. After Bitcoin’s prices plummeted in January 2018, they never even came close recovering their lost value. Add that with the consistent new stories of fraud and deceit connected to cryptocurrencies, the average users are more hesitant than ever to put their bets on new cryptocurrencies. However, blockchain-powered systems are being adopted by many industries and the governing authorities are introducing new laws and regulations to hopefully provide oversight for the crypto assets and protect consumers from people like Jared Rice.