December 12, 2018 / 9:56 PM / 6 months ago

Crypto startup AriseBank settles fraud accusations with SEC

FILE PHOTO: The U.S. Securities and Exchange Commission logo adorns an office door at the SEC headquarters in Washington, June 24, 2011. REUTERS/Jonathan Ernst/File Photo

(Reuters) - Cryptocurrency startup AriseBank will pay $2.3 million to the U.S. Securities Exchange Commission (SEC) to settle accusations of defrauding investors through claims such as building a cryptocurrency bank.

AriseBank founders Jared Rice and Stanley Ford will pay civil penalties of $184,767 each and will be prohibited from serving as officers of public companies or participating in offerings of digital securities, the SEC said in a statement.

The company is one of the first to be sued by U.S. regulators over its initial coin offering.

Earlier this year, the SEC had halted what it alleged was a fraudulent initial coin offering by AriseBank to raise $1 billion for its “AriseCoin” cryptocurrency, which was considered one of the largest initial coin offerings ever.

The SEC had said it obtained a court order to halt AriseBank’s efforts to target investors, alleging that the entity had “falsely stated that it purchased an FDIC-insured bank” and had “omitted to disclose the criminal background of key executives.”

The court had also ordered the freezing of AriseBank’s assets, while approving the appointment of a receiver for those assets tied to the ICO fraud.

Reporting by John Benny in Bengaluru; Editing by Anil D'Silva

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