Investors Lost $4M In This Celebrity-Endorsed Crypto Scam
Federal authorities have arrested the CEO of a cryptocurrency operator based in Dallas for allegedly defrauding investors out of $4 million in a digital coin scheme that legendary boxer Evander Holyfield had endorsed.
Jared Rice, Sr., the 30-year-old CEO of AriseBank was arrested Wednesday on charges of securities and wire fraud.
AriseBank has been under serious scrutiny since the beginning of the year, when the SEC brought a complaint against the company and the Texas Department of Banking issues a cease-and-desist order.
Alarm bells started ringing when Arise began advertising itself as offering FDIC-insured accounts on what it claimed was the world’s first decentralized banking platform. It also claimed to have FDIC-insured Visa credit cards.
Arise was none of this, and it certainly wasn’t FDIC insured, or authorized to conduct banking of any kind in the state of Texas. It also didn’t have a Visa partnership, according to prosecutors.
Some $4 million dollars of investment in Arise Coin later, and Arise has fallen—hard, and taken investors down with it.
According to prosecutors, Rice also “quietly converted investor funds for his own personal use, spending the money on hotels, food, clothing, a family law attorney, and even a guardian ad litem”.
He also “allegedly falsely claimed” that his ICO had raised $600 million “within just a few weeks”, and failed to disclose that he’d plead guilty to state felony charges in connection with an earlier online business scheme.
Holyfield appeared to think he was jumping into something that was going to help the millions of people left homeless after 2017’s superstorms through AriseBank and blockchain development company Cryptonomex, who allegedly said they were going to use BitShares to accelerate the recovery process in future disasters.
“I am really excited about this. The more I can do, the better. Cryptocurrency seems to be a good way to help the causes that I care about,” Holyfield was quoted as saying back in January, right before the SEC shut Arise down.
This year has seen a lot of big moves to crack down on cryptocurrency fraud, with lawsuits up over 300 percent.
That alone should convince celebrities to stop lining up to attach their names to the next crypto calling.
But increasingly, a celebrity name doesn’t mean you’re not going to get taken on a very expensive ride.