ABA Banking Journal
Federal and state regulators have ordered a halt to activities by a Dallas-based entity known as “AriseBank” that has targeted investors in an allegedly fraudulent initial coin offering. The company is alleged to have offered and sold investments in a new cryptocurrency called “AriseCoin” by depicting AriseBank as a first-of-its-kind “decentralized bank.” A court order to stop the ICO was obtained today by the Securities and Exchange Commission, while a cease and desist order against the company using the term “bank” in its name and marketing was issued on Friday by the Texas Department of Banking.
The company also falsely stated that it was in the process of purchasing FDIC-insured institutions, the SEC said, and purported to offer a branded Visa card that would allow users to spend in more than 700 virtual currencies. The company’s assets were frozen shortly before the ICO period was set to end.
As virtual currencies like bitcoin have seen massive increases in valuations over the past year, there has been an explosion of ICOs that offer the ability to buy new cryptocurrencies, both legitimate and fraudulent. This is the first time the Commission has sought the appointment of a receiver in connection with an ICO fraud,” said Steven Peikin, the SEC’s co-director of enforcement. “We will use all of our tools and remedies to protect investors from those who engage in fraudulent conduct in the emerging digital securities marketplace.”
