On August 25 U.S. Attorney for the Northern District of Texas Prerak Shah announced that, the inventor of cryptocurrency AriseCoin and who is also CEO of AriseBank was sentenced for five years in federal prison in Texas for defrauding investors of $4.25 million. He was also ordered to pay $4,258,073 in restitution by US District Judge Ed Kinkeade on Wednesday.

It was filed by the SEC Fort Worth regional office last year. According to his plea papers, he admitted that he lied to investors by saying that the AriseBank billed as the world’s “first decentralized banking platform” based on the proprietary digital currency AriseCoin platform, offered consumers for opening accounts insured by the Federal Deposit Insurance Corporation (FDIC) along with traditional banking services, including Visa-brand credit cards in addition to cryptocurrency services. In reality, AriseBank was not authorized to conduct banking services in Texas, it was not FDIC insured, and was not partnered with Visa.

As per report, hundreds of investors believed him and bought around $4,250,000 in AriseCoin using digital currencies like Bitcoin, Ethereum, and Litecoin, including fiat currency.

Attorneys in addition demonstrated that Rice, 33, instead of investing the investor funds in AriseBank, he spent the money on personal items including lawyers, hotels, food, transportation, travel, and he even failed to disclose to investors. As per the court documents Rice failed to disclose to investors about state felony charges related to “internet-related business scheme,”. The investigation was conducted by the Federal Bureau of Investigation’s Dallas Field Office. Assistant U.S. Attorneys Mary Walters, Sid Mody, and Erica Hilliard prosecuted the case.

Earlier fraud incidents against Rice

He was arrested in Texas in 2018. In 2018 he pleaded guilty to state felony charges in relation to an internet-related business scheme. In March 2019, Rice was pleaded guilty to one count of securities fraud. According to the department it made him one of the first individuals who pleaded guilty to securities fraud involving a cryptocurrency in US federal court.

In July Tech entrepreneur and antivirus software developer John McAfee accused of charges of tax evasion, money laundering, and fraud was found dead in his prison cell. U.S. attorneys had accused McAfee for using social media to illegally promote ICOs and plan a “pump-and-dump” scheme.

Cryptocurrency fraud schemes instances have included fraudulent cryptocurrency domain registrations, blockchain scams, overseas investment schemes, and criminals impersonating Elon Musk.

Indrani bose

CBW - External Analyst

INDIA