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US Department of Justice sentenced AriseCoin's creator to five years federal prison.
Jared Rice, CEO of AriseCoin, orchestrated a scheme to defraud investors out more than $4,000,000
Rice, 33, pleaded guilty in March 2019 to one count for securities fraud.
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US Justice Department sentenced AriseCoin's creator to five years federal prison for orchestrating a scheme to defraud investors of more than $4 Million.
Jared Rice, Sr., CEO of AriseBank, was also ordered by US District Judge Ed Kinkeade to pay $4,258,073 as restitution on August 25. CoinDesk was the first to report.
According to the department, Rice, 33, pleaded guilty in March 2019 to one count for securities fraud. He is the first person to plead guilty in the US to securities fraud involving cryptocurrency. In 2018, he was arrested in Texas.
Rice claimed that AriseBank was the first decentralized banking platform in the world, based on AriseCoin, according to the DOJ.
Rice told investors that they could open Federal Deposit Insurance Corporation accounts and use traditional banking services like Visa-linked credit cards.
These claims were false and Rice was, according to DOJ, not FDIC insured. He was also not a Visa partner.
He was still believed by hundreds of investors who bought $4,250,000 worth of AriseCoin digital currencies such as bitcoin, ether and litecoin as well as fiat currency.
Rice converted the funds to his personal use and kept them at his bank, rather than putting them in his account. The money was spent on food, hotels, transportation and a family lawyer.
Rice did not disclose that he had pleaded guilty in 2018 to state felony charges related to an internet-related business plan.
Rice also settled a civil suit for fraudulent initial coin offerings involving AriseCoin.
As digital assets become more popular, cryptocurrency fraud schemes are on the rise. Fraudsters have evolved to con people.
Some of these instances include fraudulent domain registrations in cryptocurrency, scams with blockchain, overseas investment schemes and criminals pretending to be Elon Musk.
