ArizeBank CEO Arrested By FBI For Multimillion Crypto Fraud Case
The CEO of the ArizeBank, 30-year-old Jared Rice Sr., was arrested by the FBI on November 28, 2018.
According to the official press release published by the US Department of Justice, the U.S. Attorney for the Northern District of Texas, Erin Nealy Cox, charged Rice for depriving hundreds of investors of more than $4 million through his alleged decentralized banking option.
The web of lies
According to the official court document, Jarred Rice intentionally misinformed investors by making several false claims about his project.
He declared that his “first decentralized banking platform” was offering accounts insured by the Federal Deposit Insurance Corporation (FDIC). Furthermore, Rice led investors to believe that his company will allow its clients to connect their accounts with VISA debit and credit cards.
Unfortunately for investors, the reality was far from what was claimed to be true.
ArizeBank didn’t have the license to operate any form of banking operation in the state of Texas. Moreover, it wasn’t FDIC insured, nor the company had any form of a partnership agreement signed with VISA.
“My office is committed to enforcing the rule of law in the cryptocurrency space,” commented Nealy Cox, adding that her district will not tolerate this sort of fraudulent behavior, neither on or offline.
Presumptuously stealing other people’s money
Despite the fact that Rice described his platform as a non-profit, in reality, he was transferring investors’ funds to his own account, using them for his private purposes.
According to the indictment against him, he was using the investors’ money to pay for hotels, food, and clothing. Furthermore, on a few occasions, Rice even used those funds to be able to afford a guardian ad litem and a family law attorney, probably hired to defend him against the domestic violence charges he was accused of in 2016.
Shilling the ICO with false claims
The CEO of AriseBank also failed to inform his investors about pleading guilty about his prior online business fraud and falsifying the Secretary of State’s seal and signature. Meanwhile, he has been promoting his Initial Coin Offering (ICO) with false claims of raising $500 million in a matter of weeks.
Interestingly enough, investors obviously didn’t bother to research the individual they were sending their money to. All information about Rice and his legal troubles were officially published, so it is unlikely that they would keep investing if they were diligent enough to realize where their money was going.
Instead of doing their due diligence, investors kept pouring Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and fiat currencies into the suspicious-looking project and its CEO, which best portrays the frenzy the cryptocurrency market was going through during the last bull run.
A long-term sentence is possible
According to the Department of Justice’s press release, Jarrod Rice, if convicted, is facing up to 120 years in a federal penitentiary, possibly caused by the repetitive nature of his crime.
As the main prosecutors in the case, the state appointed the assistant US Attorneys, Mary Walters, and Sid Mody, who are both going to face Rice’s legal representative in court. This time, we hope, he’s not going to pay for the services of the attorney with investors’ funds.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your own research and/or consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.