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Initial Coin Offering Scam Charges Settled

Initial Coin Offering Scam Charges Settled

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On December 12, 2018, the SEC announced that two former executives behind an allegedly fraudulent initial coin offering (“ICO”) stopped by the SEC earlier this year have been ordered in federal court to pay nearly $2.7 million and prohibited from serving as officers or directors of public companies or participating in future offerings of digital securities.

The SEC reported that AriseBank’s then-CEO, Jared Rice, Sr. (“Rice”), and then-COO, Stanley Ford (“Ford”), were accused of offering and selling unregistered investments in their purported “AriseCoin” cryptocurrency by depicting AriseBank as a first-of-its-kind decentralized bank offering a variety of services to retail investors.

“Rice and Ford lied to AriseBank’s investors by pitching the company as a first-of-its kind decentralized bank offering its own cryptocurrency for customer products and services,” said Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office.  “The officer-and-director bar and digital securities offering bar will prevent Rice and Ford from engaging in another cryptoasset-based fraud.”

According to the SEC, to settle the charges, 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 a $184,767 penalty.  Rice and Ford 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.

Chief Judge Barbara M.G. Lynn of United States District Court for the Northern District of Texas ordered the sanctions on December 11.  Rice and Ford agreed to the settlements without admitting or denying the allegations in the SEC’s complaint, and on Nov. 28, 2018, the U.S. Attorney’s Office for the Northern District of Texas announced parallel criminal charges against Rice.

Source: SEC.gov

Kehoe Law Firm, P.C.