US SEC Halts Alleged Crypto ICO Scam From ‘Decentralized’ Bank Seeking $1 Billion

Charges in this action in early December were the first filed by the SEC’s new Cyber Unit, which was formed in September to focus the Enforcement Division’s cyber-related expertise on misconduct involving distributed ledger technology and ICOs, the spread of false information via electronic and social …

The U.S. Securities and Exchange Commission (SEC), which holds primary responsibility for enforcing federal securities laws and regulating the nation’s stock exchanges, obtained a court order halting an allegedly fraudulent initial coin offering (ICO), which targeted retail investors to fund what was claimed to be the world’s first “decentralized bank.”

According to the SEC’s complaint filed in federal district court in Dallas on January 25 and unsealed as of late yesterday, Dallas-based AriseBank used social media, a celebrity endorsement, and other wide dissemination tactics in order to raise what it claims to be $600 million of its $1 billion goal. This in a matter of two months.

AriseCoin’s public sale commenced around December 26, 2017, and was originally scheduled to conclude on January 27, 2018, with distribution to investors on February 10.

Stepping Up Action

The move to halt this ICO follows announcements in December the SEC to halt an ICO by Munchee Inc., a California-based company selling digital tokens to investors to raise capital for its blockchain-based food review service (before any tokens were delivered and refund investors).

On 4 December, the agency initiated an emergency asset freeze to halt a fast-moving ICO scam that had raised up to $15 million from thousands of investors since last August. This latter ICO, organized by a recidivist Quebec securities law violator, Dominic Lacroix, and his company PlexCorps, falsely promised a 13-fold profit in less than a month.

Charges in this action in early December were the first filed by the SEC’s new Cyber Unit, which was formed in September to focus the Enforcement Division’s cyber-related expertise on misconduct involving distributed ledger technology and ICOs, the spread of false information via electronic and social media, hacking and threats to trading platforms.

Action by the SEC also coincided with media reports that the U.S. Commodity Futures Trading Commission (CFTC) had sent subpoenas on December 6 to virtual-currency venue Bitfinex and Tether, a company that issues a widely traded coin and claims it’s pegged to the dollar.

Conceptual image of a burning Bitcoin. (Photo:Ulrich Baumgarten via Getty Images),

Unregistered Investments

According to a communiqué from the SEC it is understood that AriseBank and its co-founders Jared Rice Sr. and Stanley Ford allegedly offered and sold unregistered investments in their purported “AriseCoin” cryptocurrency by depicting AriseBank as a “first-of-its-kind” decentralized bank.

The bank claimed that it would be offering a variety of consumer-facing banking products and services using over seven hundred different virtual currencies. Furthermore, their sales pitch claimed that it had developed an algorithmic trading application that automatically trades in various cryptocurrencies.

The SEC alleges that AriseBank falsely stated that it purchased an FDIC-insured bank, which enabled it to offer customers FDIC-insured accounts and that it also offered customers the ability to obtain an AriseBank-branded VISA card to spend any of the 700-plus cryptocurrencies. The FDIC (Federal Deposit Insurance Corporation) is a U.S. government corporation providing deposit insurance to depositors in US banks).

AriseBank also allegedly omitted to disclose the criminal background of key executives.

Stephanie Avakian, Co-Director of the SEC’s Enforcement Division, commenting said: “We allege that AriseBank and its principals sought to raise hundreds of millions from investors by misrepresenting the company as a first-of-its-kind decentralized bank offering its own cryptocurrency to be used for a broad range of customer products and services.

She added: “We sought emergency relief to prevent investors from being victimized by what we allege to be an outright scam.”

Steven Peikin, Co-Director of the SEC’s Enforcement Division, noted that this is the first time the Commission has sought the appointment of a receiver in connection with an ICO fraud.

“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,” he stressed.

The Director of the SEC’s Fort Worth Regional Office, Shamoil T. Shipchandler, remarked that: “Attempting to conceal what we allege to be fraudulent securities offerings under the veneer of technological terms like ‘ICO’ or ‘cryptocurrency’ will not escape the Commission’s oversight or its efforts to protect investors.”

The court approved an emergency asset freeze over AriseBank, Rice, and Ford and appointed a receiver over AriseBank, including over its digital assets.

The SEC intervened to protect the digital assets before they could be dissipated, thus enabling the receiver to immediately secure various cryptocurrencies held by AriseBank including Bitcoin, Litecoin, Bitshares, Dogecoin, and BitUSD.

The SEC indicated that it seeks “preliminary and permanent injunctions, disgorgement of ill-gotten gains plus interest and penalties”, and bars against Rice and Ford to prohibit them from serving as officers or directors of a public company or offering digital securities again in the future.

Assistance in connection with the investigation into AriseBank was provided by the Federal Bureau of Investigation (FBI), U.S. Attorney’s Office for the Northern District of Texas, Federal Deposit Insurance Corporation, U.S. Patent and Trademark Office, as well as the Texas Department of Banking.

As to the merits of a decentralized bank in the cryptocurrency space, Siim Õunap, an FX and crypto markets trader said: “With the usage of crypto becoming increasingly popular, it is inevitable that there will be a decentralized (crypto)bank in the near future. And, as with Bitcoin, the first one will take the world in a storm.”

The Estonian based in Tallinn added: “It is a service that is needed with more and more people requiring access to a crypto bank and increasing numbers of businesses wanting to accept crypto payments. That excitement aside, the better something looks, the more we have to be aware of the legitimacy of it.

Despite the efforts of the SEC to raise the ante in clamping down on ICO scams and other securities abuses, they are unlikely to be the last we will see. Nevertheless, investors should take on board some sound advice before they get into such ventures.

As Charles Hoskinson, a former Ethereum co-founder who in 2015 founded IOHK, a leading blockchain R&D company, said to me in relation to investing in ICO’s: “Before purchasing an ICO my first piece of advice would be to understand the project’s whitepaper and the product or service. The reality is that if you cannot understand the whitepaper then don’t buy into it.”

In addition, the American from Boulder, Colorado, whose IOHK team over the past two years designed Cardano, an industrial-strength blockchain, stressed that potential investors should never put more money into anything – ICOs included – than they can afford to lose and understand that these vehicles are tremendously speculative.”

Additionally you should actually know the team behind any project. “They have to be interactive, one has to know and understand their history and background, their incentives…but also more broadly the team’s philosophy,” Hoskinson said. Understand too the evolution of the product or service and the natural demand for it, as well as according to Hoskinson the “technological risk and the execution risk for the project.”

For investors in the AriseBank ICO who believe they may be a victim are asked to report it to the SEC as a tip or complaint.

The SEC’s Office of Investor Education and Advocacy also issued an Investor Alert last August warning investors about scams of companies claiming to be engaging in ICOs.

Related Posts:

NIST Has Already Amended Its Controversial Bitcoin Cash Fork Description

U.S. government standards agency NIST has reportedly already amended its draft description of Bitcoin Cash, after receiving several complaints from Bitcoin (BTC) proponents. The initial National Institute of Standards and Technology draft had suggested Bitcoin Cash represented the original …

U.S. government standards agency NIST has reportedly already amended its draft description of Bitcoin Cash, after receiving several complaints from Bitcoin (BTC) proponents. The initial National Institute of Standards and Technology draft had suggested Bitcoin Cash represented the original blockchain and Bitcoin (BTC) was a fork, drawing howls of protest from the community.

Also read: CFTC Subpoenas Bitfinex and Tether Over USD-Pegged Token

Subscribe to the Bitsonline YouTube channel for more great videos featuring industry insiders & experts

NIST Listens to Bitcoiners

Reddit user “bitradr” posted on the r/bitcoin forum an email response they’d received from NIST paper co-author Dylan Yaga, a day after the draft report was released for public comment. “Thank you for your comments. You, along with many others, expressed concern on section 8.1.2,” he said.

Yaga also included an amended version of the section, which now reads:

8.1.2 Bitcoin Cash (BCH or BCC1) In 2017, Bitcoin users adopted an improvement proposal for Segregated Witness (known as SegWit, where transactions are split into two segments: transactional data, and signature data) through a soft fork. SegWit made it possible to store transactional data in a more efficient form. However, a group of users had different opinions on how Bitcoin should evolve – and developed a hard fork of the Bitcoin blockchain titled Bitcoin Cash. Rather than implementing the SegWit changes, the developers of Bitcoin Cash decided to increase the maximum blocksize (additionally the developers made changes to other aspects of the system, such as the difficulty adjustment algorithm). When the hard fork occurred, people had access to the same amount of coins on Bitcoin and Bitcoin Cash.

1The ticker used for Bitcoin Cash differs depending on the exchange; some use BCH, some BCC

The new version — which, for the record, is still a draft and subject to further alteration — has removed one key section that drew the most ire. That was:

“When SegWit was activated, it caused a hard fork, and all the mining nodes and users who did not want to change started calling the original Bitcoin blockchain Bitcoin Cash (BCC). Technically, Bitcoin is a fork and Bitcoin Cash is the original blockchain.”

Though the wording was clunky and open to interpretation (particularly over what “caused” might mean) many saw it as misleading. The hard fork that created Bitcoin Cash (BCC or BCH) happened on August 1st, 2017, right after a requisite percentage of miners signaled support for a plan to implement SegWit. SegWit itself was activated by a soft fork 23 days later.

Draft Blockchain Report Still Open for Comments

NIST logoCommentators (both pro- and against) also wondered how NIST had come to include such a contentious description, and who might have influenced the authors to write it. However, Yaga did not provide any details on that matter in bitradr’s email.

The deadline for comments on the draft document “NISTIR 8202 – Blockchain Technology Overview” is February 23rd, 2018 — no doubt NIST will receive plenty more suggestions from all corners of the community and Bitcoin scaling debate before that day.

NIST is a non-regulatory agency of the United States Department of Commerce, with a mission to set measurement standards and promote industrial competitiveness. Its report, according to an announcement, is aimed at helping businesses become acquainted with blockchain technology and some of the key projects using it.

Do you have any more suggestions for NIST? Send them an email… then tell us in the comments here.


Images via NIST, Jon Southurst

Related Posts:

  • No Related Posts

Crown Price Tops $2.93 (CRW)

Crown logo Crown (CURRENCY:CRW) traded 16.4% lower against the dollar during the one day period ending at 17:00 PM ET on January 30th. One Crown coin can now be bought for $2.93 or 0.00028616 BTC on exchanges including LiteBit.eu, BarterDEX, Bittrex and C-CEX. Crown has a market cap …

Crown logoCrown (CURRENCY:CRW) traded 16.4% lower against the dollar during the one day period ending at 17:00 PM ET on January 30th. One Crown coin can now be bought for $2.93 or 0.00028616 BTC on exchanges including LiteBit.eu, BarterDEX, Bittrex and C-CEX. Crown has a market cap of $49.88 million and $161,706.00 worth of Crown was traded on exchanges in the last 24 hours. In the last seven days, Crown has traded 18.2% lower against the dollar.

Here’s how similar cryptocurrencies have performed in the last 24 hours:

  • Bitcoin (BTC) traded down 8% against the dollar and now trades at $10,387.40 or 1.00000000 BTC.
  • Bitcoin Cash (BCH) traded down 8.9% against the dollar and now trades at $1,509.91 or 0.14733000 BTC.
  • Steem (STEEM) traded 13% lower against the dollar and now trades at $5.13 or 0.00050011 BTC.
  • PACcoin (PAC) traded down 11.5% against the dollar and now trades at $0.0001 or 0.00000001 BTC.
  • Counterparty (XCP) traded down 13.7% against the dollar and now trades at $47.03 or 0.00457537 BTC.
  • Namecoin (NMC) traded 7.2% lower against the dollar and now trades at $3.61 or 0.00035204 BTC.
  • Unobtanium (UNO) traded 5% lower against the dollar and now trades at $122.67 or 0.01193510 BTC.
  • ATBCoin (ATB) traded down 14% against the dollar and now trades at $0.49 or 0.00004790 BTC.
  • CHIPS (CHIPS) traded down 10.3% against the dollar and now trades at $0.31 or 0.00003009 BTC.
  • Terracoin (TRC) traded 6.2% lower against the dollar and now trades at $0.27 or 0.00002639 BTC.

Crown Coin Profile

Crown (CURRENCY:CRW) is a proof-of-work (PoW) coin that uses the SHA-256 hashing algorithm. Its genesis date was October 8th, 2014. Crown’s total supply is 17,006,392 coins. Crown’s official website is crown.tech. The Reddit community for Crown is /r/Crown and the currency’s Github account can be viewed here. Crown’s official Twitter account is @CrownPlatform and its Facebook page is accessible here.

According to CryptoCompare, “Crowncoin was created in 2014 as a proof of work digital currency and an alternative to FIAT currencies. CRW is a peer to peer digital currency, which enables to send and receive online payments between two parties without the need of financial institution. “

Crown Coin Trading

Crown can be traded on these cryptocurrency exchanges: Bittrex, LiteBit.eu, YoBit, C-CEX, CoinExchange and BarterDEX. It is not possible to buy Crown directly using U.S. dollars. Investors seeking to trade Crown must first buy Bitcoin or Ethereum using an exchange that deals in U.S. dollars such as Changelly, Coinbase or Gemini. Investors can then use their newly-acquired Bitcoin or Ethereum to buy Crown using one of the exchanges listed above.

Receive News & Updates for Crown Daily – Enter your email address below to receive a concise daily summary of the latest news and updates for Crown and related cryptocurrencies with MarketBeat.com’s FREE CryptoBeat newsletter.

Related Posts:

Cryptocurrency News: Samsung Manufacturing Chips For Bitcoin Mining

Meanwhile, Taiwan Semiconductor Manufacturing Company (TSMC) has picked up large orders from Bitmain for production of mining chips, according to a Tuesday DigiTimes report. Bitmain is China’s leading bitcoin miner and designer of ASIC chips. Advanced Semiconductor Engineering (ASE) and …

Samsung is breaking into the bitcoin world.

The Korean company has reportedly begun production of bitcoin and cryptocurrency mining equipment and ASIC (Application Specific Integrated Circuit) mining chips, according to Korean news site The Bell.

The news comes as the use of cryptocurrency rises, with more than 1,000 cryptocurrencies in the world right now.

Samsung reportedly concluded a foundry contract with a Chinese bitcoin mining hardware maker. The mass production phase began this month after Samsung finished up the development process of semiconductor ASIC for bitcoin mining last year.

The South Korean company told the Bell: “We are in the middle of a foundry business that is being supplied to a virtual money mining company in China.”


Japan BitcoinA man walks past a poster that informs customers that bitcoin can be used in this shop in Tokyo, Jan. 6, 2018.Photo: Toru Yamanaka/AFP/Getty Images

ASIC is a chip that is designed for a special application, in this case the semiconductor would be optimized for bitcoin mining. Bitcoin mining, which is a verification process for transactions, requires high-speed and energy-efficient hardware. Because of that, companies that mine in large batches have resorted to ASIC chips that are customized to their needs.

Samsung has also been working on DRAM for graphics cards, which are useful for cryptocurrency mining. The company announced in December it had begun mass production of second-generation 10-nanometer class, 8GB DDR4 DRAM. At the same time, Samsung announced it was “accelerating its plans for much faster introductions of next-generation DRAM chips and systems, including DDR5, HBM3, LPDDR5 and GDDR6, for use in enterprise servers, mobile devices, supercomputers, HPC systems and high-speed graphics cards.”

The GDDR6 DRAM improves power efficiency and can boost GPU performance for mining.


bitcoinAn Israeli holds a visual representation of the digital cryptocurrency Bitcoin, at the ‘Bitcoin Change’ shop in the Israeli city of Tel Aviv on January 17, 2018.Photo: JACK GUEZ/AFP/Getty Images

Meanwhile, Taiwan Semiconductor Manufacturing Company (TSMC) has picked up large orders from Bitmain for production of mining chips, according to a Tuesday DigiTimes report. Bitmain is China’s leading bitcoin miner and designer of ASIC chips. Advanced Semiconductor Engineering (ASE) and Global Unichip are reportedly sharing the backend packaging and testing orders.

TSMC recently said it expects demand for cryptocurrency mining to continue to increase this year, which will lead to a larger demand for chips.

“Our fourth quarter business was supported by major mobile product launches and continuing demand for cryptocurrency mining,” TSMC Senior Vice President and Chief Financial Officer Lora Ho said this month. “Moving into first quarter 2018, we expect the strong demand for cryptocurrency mining will continue while mobile product seasonality will dampen our business in this quarter.”

Related Posts:

  • No Related Posts

Infinity Economics Market Cap Hits $0.00 (CRYPTO:XIN)

Infinity Economics can be traded on the following cryptocurrency exchanges: . It is not possible to buy Infinity Economics directly using U.S. dollars. Investors seeking to acquire Infinity Economics must first buy Bitcoin or Ethereum using an exchange that deals in U.S. dollars such as Gemini, GDAX or …

Infinity Economics (CURRENCY:XIN) traded down 6% against the U.S. dollar during the 24-hour period ending at 17:00 PM ET on January 23rd. One Infinity Economics coin can now be purchased for $0.0150 or 0.00000146 BTC on major cryptocurrency exchanges. Over the last seven days, Infinity Economics has traded 14.7% lower against the U.S. dollar. Infinity Economics has a market cap of $0.00 and approximately $186,346.00 worth of Infinity Economics was traded on exchanges in the last day.

Here is how other cryptocurrencies have performed over the last day:

  • Bitcoin (BTC) traded 8% lower against the dollar and now trades at $10,387.40 or 1.00000000 BTC.
  • Bitcoin Cash (BCH) traded 8.9% lower against the dollar and now trades at $1,509.91 or 0.14733000 BTC.
  • Steem (STEEM) traded down 13% against the dollar and now trades at $5.13 or 0.00050011 BTC.
  • Emercoin (EMC) traded 2.1% lower against the dollar and now trades at $5.33 or 0.00051974 BTC.
  • BitcoinDark (BTCD) traded 11.1% lower against the dollar and now trades at $136.47 or 0.01327730 BTC.
  • PACcoin (PAC) traded down 11.5% against the dollar and now trades at $0.0001 or 0.00000001 BTC.
  • Experience Points (XP) traded down 25% against the dollar and now trades at $0.0007 or 0.00000007 BTC.
  • Counterparty (XCP) traded down 13.7% against the dollar and now trades at $47.03 or 0.00457537 BTC.
  • Peercoin (PPC) traded 7.7% lower against the dollar and now trades at $4.57 or 0.00044471 BTC.
  • BitBean (BITB) traded 1.5% lower against the dollar and now trades at $0.0255 or 0.00000172 BTC.

About Infinity Economics

Infinity Economics (XIN) is a Proof-of-Stake (PoS) coin that uses the SHA-256 hashing algorithm. Its launch date was January 10th, 2017. Infinity Economics’ total supply is 9,000,000,000 coins. The official website for Infinity Economics is www.infinity-economics.org. Infinity Economics’ official Twitter account is @XIN_Foundation and its Facebook page is accessible here. The official message board for Infinity Economics is forum.infinity-economics.org.

Buying and Selling Infinity Economics

Infinity Economics can be traded on the following cryptocurrency exchanges: . It is not possible to buy Infinity Economics directly using U.S. dollars. Investors seeking to acquire Infinity Economics must first buy Bitcoin or Ethereum using an exchange that deals in U.S. dollars such as Gemini, GDAX or Changelly. Investors can then use their newly-acquired Bitcoin or Ethereum to buy Infinity Economics using one of the exchanges listed above.

Receive News & Ratings for Infinity Economics Daily – Enter your email address below to receive a concise daily summary of the latest news and analysts’ ratings for Infinity Economics and related companies with MarketBeat.com’s FREE daily email newsletter.

Related Posts:

  • No Related Posts