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The CEO of a cryptocurrency company has pleaded guilty to swindling $4.2 million from unsuspecting investors, in the latest example of unscrupulous activity in the crypto space.
Jared Rice, CEO at AriseBank, was arrested by FBI enforcement officers in December on charges of wire fraud and securities fraud, in relation to the activities of the firm. The case is the latest example of law enforcement clamping down on frauds and scams in the cryptocurrency sector.
In a statement, U.S. Attorney for the Northern District of Texas Erin Nealy Cox said Rice put forward a confession and guilty plea.
Amongst the charges levelled at Rice and AriseBank were claims the firm was offering “FDIC-insured accounts and traditional banking services, including Visa-brand credit and debit cards, in addition to cryptocurrency services.”
Rice entered a guilty plea to one charge of securities fraud, but could have implicated himself in lying to investors during his time at AriseBank.
The disgraced CEO had been facing a maximum term of 120 years in jail, which has subsequently been reduced to 20 years on account of the guilty plea.
AriseBank was involved in scamming some $4.25 million from crypto investors, and based on the judicial outcome, Rice may be required to repay the full amount. Rice will be sentenced in July.
The charges follow on from fines of $2.7 million resulting from the allegedly scam initial coin offering (ICO), a matter in which both AriseBank and Rice were implicated, alongside the firm’s COO Stanley Ford.
AriseBank has been attracting legal trouble across the United States, with Texas regulators recently issuing a cease and desist against the firm for operating in the state without the required permissions.
This follows similar action against the now-collapsed BitConnect, as part of a wider crackdown on rogue cryptocurrency operators.
Prosecutors said the guilty plea had set a new precedent for the emerging cryptocurrency sector, noting, “Given the fairly recent emergence of cryptocurrency, Rice’s guilty plea is one of the first of its kind in the U.S.”
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