AriseBank founder scammed investors for $4.2 million, pleads guilty

The founder of crypto company AriseBank has pleaded guilty for scamming his investors, the U.S. Attorney for the Northern District of Texas Office wrote. Jared Rice Sr. pleaded guilty to one count of securities fraud, having defrauded $4.2 million. Rice told his investors their accounts would be insured by the Federal Deposit Insurance Corp., and they would receive Visa credit cards. However, AriseBank was not have FDIC insurance or a contract with Visa. Moreover, it didn’t even have authorization to operate in Texas. Rice admitted to having spent the money.

According to the U.S. Attorney for the Northern District of Texas Office, “His plea makes this case one of the first in which an individual has pleaded guilty to securities fraud involving a cryptocurrency in U.S. federal court.”

Rice was arrested by the FBI in November. He was originally charged on three counts of securities fraud and three counts of wire fraud. If found guilty, he still faces up to 20 years in federal prison. He is also expected to repay his investors.

Last year, Rice was also subject to a lawsuit by the U.S. Securities and Exchange Commission for allegedly running a fraudulent ICO.