Two former executives behind an allegedly fraudulent initial coin offering (ICO) that was stopped by the Securities and Exchange Commission (SEC) earlier this year have been ordered in federal court to pay nearly $2.7 million.
Lied to investors
AriseBank’s then-ceo Jared Rice Sr and then-coo Stanley Ford were accused of offering and selling unregistered investments in their purported ‘AriseCoin’ cryptocurrency by depicting AriseBank as a first-of-its-kind decentralized bank offering a variety of services to retail investors. ‘Rice and Ford lied to AriseBank’s investors by pitching the company as a first-of-its kind decentralized bank offering its own cryptocurrency for customer products and services,’ said Shamoil T Shipchandler, director of the SEC’s Fort Worth regional office. He said, ‘the officer-and-director bar and digital securities offering bar will prevent Rice and Ford from engaging in another cryptoasset-based fraud.’ The executives have also been prohibited from serving as officers or directors of public companies or participating in future offerings of digital securities.
To settle the SEC’s charges, Rice and Ford agreed to be held jointly and severally liable for $2,259,543 in disgorgement plus $68,423 in prejudgment interest, and each must pay a $184,767 penalty. They also agreed to lifetime bars from serving as officers and directors of public companies and participating in digital securities offerings, and permanent prohibitions against violating the antifraud and registration provisions of the federal securities laws. Chief Judge Barbara M G Lynn of the US district court for the northern district of Texas ordered the sanctions on December 11. Rice and Ford agreed to the settlements without admitting or denying the allegations in the SEC’s complaint. The SEC’s office of investor education and advocacy issued an investor alert in August 2017 warning investors about scams of companies claiming to be engaging in initial coin offerings.