scorecardThe creator of a cryptocurrency called AriseCoin was sentenced to 5 years in prison for $4 million fraud scheme
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The creator of a cryptocurrency called AriseCoin was sentenced to 5 years in prison for $4 million fraud scheme

Isabelle Lee   

The creator of a cryptocurrency called AriseCoin was sentenced to 5 years in prison for $4 million fraud scheme
Investment2 min read
  • The person behind cryptocurrency AriseCoin was sentenced to five years in federal prison by the US Department of Justice.
  • AriseCoin CEO Jared Rice masterminded a scheme that swindled investors out of more than $4 million.
  • Rice, 33, pleaded guilty to one count of securities fraud in March 2019.

The person behind cryptocurrency AriseCoin was sentenced to five years in federal prison by the US Justice Department for mastermiding a scheme that swindled investors out of more than $4 million.

AriseBank CEO Jared Rice, Sr. was also ordered to pay $4,258,073 in restitution by US District Judge Ed Kinkeade on August 25. CoinDesk was first to report.

Rice, 33, pleaded guilty to one count of securities fraud in March 2019, making him one of the first individuals who pleaded guilty to securities fraud involving a cryptocurrency in US federal court, according to the department. He was arrested in Texas in 2018.

The scheme was built on the claim by Rice that AriseBank was the world's "first decentralized banking platform" based on the proprietary digital currency AriseCoin, the DOJ said.

Rice would tell investors they could open accounts insured by the Federal Deposit Insurance Corporation and use traditional banking services such as credit cards linked to Visa.

The claims were false, and Rice, according to the DOJ, was not FDIC insured and was not a Visa partner.

Still, hundreds of investors believed him and bought approximately $4,250,000 in AriseCoin using digital currencies like bitcoin, ether, litecoin, as well as fiat money.

Rice then covertly converted these funds for his own personal use, according to the DOJ, instead of putting them with his bank. He spent the money on hotels, food, transportation, and a family law attorney.

Rice also failed to disclose that he pleaded guilty to state felony charges in 2018 in relation to an internet-related business scheme.

In the same year, Rice settled a civil action for a fraudulent initial coin offering involving AriseCoin.

Cryptocurrency fraud schemes have been on the rise as digital assets gain popularity, and fraudsters have become creative in how they swindle people.

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

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