In a report released yesterday by the US department of Justice, 30 year old Jared Rice was arrested on Wednesday by the FBI in Northern Texas. What did he do? Mr. Rice reportedly ‘duped’ 100’s of investors out of over $4 million by making false claims and promises over his startup bank and its ICO.
Mr. Rice was also the subject of a civil action lawsuit filed by the SEC’s Fort Worth regional office earlier in 2018. Rice was indicted on three counts of securities fraud and three counts of wire fraud.
Mr. Rice’s false promises.
Mr. Rice promised investors that his ICO’s token, the Arise Coin, would offer investors Visa like functionality on the world’s “first decentralized banking platform”. Not only was the bank to offer cryptocurrency services, but it was also to offer FDIC insured accounts, Visa branded cards as well as traditional banking services.
All of Arise’s Bank promises became clearly false when an investigation revealed that Arise Bank was not authorized to conduct banking business in Texas, was not insured by the FDIC, and had no contact of partnership aligned with Visa.
Mr. Rice must of thought he was a high roller with his money raising ICO that he claimed had raised over $600 million in funding. In all actuality, the ICO had barely raised $4 million in funding, all of which was used for Mr. Rice’s personal purposes.
What did he do with the money?
According the Doj report, Rice used all of the investors funding on personal purchases including ‘hotels, food, clothing, a family law attorney, and even a guardian ad litem.’ All investors made their investments by way of fiat currency or by purchasing the Arise Coin by using major crypto’s including Bitcoin, Ethereum and Litecoin.
It is suspected that Rice slowly converted all crypto assets into cash that he then used in his personal expenditures. Rice also neglected to inform investors that he was already an established criminal before this Arise Coin scam. Previously Rice had plead guilty to state felony charges in connection with a prior internet-related business scheme.
“My office is committed to enforcing the rule of law in the cryptocurrency space,” said Nealy Cox, the U.S. Attorney for the Northern District of Texas. “The Northern District of Texas will not tolerate this sort of flagrant deception – online or off.”
The FBI conducted the investigation and Rice is awaiting trial. If Rice is found guilty, he faces up to 120 years in Prison.