Latest Articles

FBI Arrests Crypto CEO for Defrauding Investors of $4M

  • AriseBank ICO’d in 2017; CEO claimed to raise $600 million
  • CEO promised world’s “first decentralized banking platform” and Visa-branded credit cards
  • Faces a potential prison term of 120 years

A U.S. court based in Texas has announced the arrest and indictment of the CEO of AriseBank, for allegedly making false promises that the crypto company would be the world’s “first decentralized banking platform,” according to an indictment.

The subject of the indictment, Jared Rice, was also the founder of AriseBank. Launched in early 2017, AriseBank promised investors that it could provide customers with FDIC-insured banking services and Visa-branded credit and debit cards, in addition to cryptocurrency-related financial services. The startup also claimed that it could use Marqeta’s VISA API to provide integrations between crypto wallets and traditional payment processing streams. And it reported that it had bought two traditional U.S. banks.

According to the federal government, AriseBank was not, in fact, FDIC-insured, nor did it have partnership agreements with Visa or Marqeta. And it had not acquired other banks.

AriseBank conducted an ICO later in 2017 using its AriseCoin cryptocurrency. Rice claimed that the ICO raised $600 million within a few weeks and was on track to become the first billion-dollar ICO, while in reality the company’s total funding amounted only to about $4.25 million, according to the indictment.

Federal prosecutors said that Rice, 30, spent that money on goods and services for personal use. He faces a potential prison term of 120 years if convicted.

Lesson for Crypto CEOs: Don’t Lie About Traditional Banking Services

If you’re looking for a story about the federal government cracking down on crypto investors or entrepreneurs, this is not it.

The charges that Rice faces all stem from his having allegedly lied to investors about AriseBank’s ability to provide traditional banking services, like credit cards. They don’t directly involve the company’s crypto-related activities. The indictment does say that Rice used an ICO based on fraudulent information to raise funds and that he misled investors about his ability to integrate crypto wallets with conventional banking services. But the government’s charges are based on allegations of false claims involving those activities, not the facts that AriseBank carried out an ICO or explored the possibility of integrating with crypto wallets.

While there remain lots of unanswered questions about how crypto assets and services might be regulated — especially when it comes to potential civil liabilities related to them — this indictment doesn’t bring us any closer to a world where crypto activity leads to criminal charges.

State Farm Is Testing a Blockchain-Based Subrogation Manager

State Farm announced on December 10 that it is experimenting with a blockchain-based solution for managing the subrogation process in the insurance industry, making the company the latest major enterprise to explore blockchain technology.

LinkedIn Finds Blockchain Developer to Be 2018’s Most Rapidly Growing Job

Distributed Summary:

  • In 2018 U.S. Emerging Jobs Report, LinkedIn says blockchain developer hiring grew by 33x
  • Top skills required for the position include Solidity, Node.js, Ethereum and cryptocurrency
  • IBM, ConsenSys and Chainyard are top hirers for the position and SF, NY and ATL the top locations

U.S. Congressman Suggests “Do Blockchain” and “Wall Coins” to Fund Border Wall

Distributed Summary:

  • Ohio State Representative Warren Davidson throws out blockchain-based fundraising to construct wall between U.S. and Mexico border
  • Floats the cryptocurrency name “wall coin” in seemingly offhand remark
  • Demonstrates awareness, if not sophisticated understanding, of blockchain-based fundraising and incentivization

BlockFi, a Cryptocurrency Lending Firm With Credit Card Plans, Receives Funding From Fidelity and Mike Novogratz

Financial services behemoth Fidelity Investments and perennial crypto booster Mike Novogratz have provided funding for BlockFi, a cryptocurrency lending startup.