In the U.S. Securities and Exchange Commission (SEC), which applies to the primary responsibility for implementing federal securities laws and regulating national securities exchanges, the court ordered the cessation of alleged fraud in the initial coin issuance (ICO) which targets retail funds what claims to be the world’s first A “decentralized bank.”
According to a complaint filed by the Securities and Exchange Commission to the Dallas Federal District Court on January 25 and later Kaifeng late last year, Dallas-based AriseBank uses a wide range of media such as social media and celebrity endorsements to increase its claim The target of 600 million U.S. dollars and 1 billion U.S. dollars. This is within two months.
The public offering of AriseCoin started around December 26, 2017 and was originally scheduled to end on January 27, 2018 and distributed to investors on February 10.
The move to stop the ICO was announced in December that the Securities and Exchange Commission of the United States (SEC) announced that it would stop Munchee Inc., a California-based company, from selling digital tokens to investors to raise funds for blockchain food assessment services Investors before any token delivery and refund).
On December 4, the agency launched an emergency asset freeze to stop thousands of investors raising as much as $ 15 million in ICO fraud since August last year. Organized by Dominic Lacroix, a recidivist of Quebec securities violations, and his company PlexCorps, the latter ICO reported a 13x profit in less than a month.
Charges for this operation in early December were the first application of the SEC’s newly formed computer unit, which was set up in September to focus the law enforcement network-related expertise on misconduct involving distributed ledgers and ICO, The spread of false information media, hackers and trading platforms by electronic and social media threats.
The Securities and Exchange Commission also reported media reports that the Commodity Futures Trading Commission (CFTC) issued a subpoena on 6 December to Bitfinex and Tether, the virtual money exchange that issued widely traded coins and claimed to be pegged to the U.S. dollar .
According to a communiqué from the Securities and Exchange Commission, it is understood that AriseBank and its co-founders Jared Rice Sr. and Stanley Ford allegedly offer and sell unregistered investments in their alleged “AriseCoin” cryptocurrency, describing AriseBank as ” The first “” decentralized bank.
The bank claims it will offer a variety of consumer-facing banking products and services in more than 700 different virtual currencies. In addition, their sales claim claims that they have developed an algorithmic trading application that automatically transacts various cryptocurrencies.
The SEC states that AriseBank falsely states it has purchased a FDIC-insured bank to provide its customers with an FDIC insurance account and also provides customers the ability to acquire AriseBank-branded VISA cards to pay over 700 cryptocurrencies. FDIC (Federal Deposit Insurance Corporation) is a U.S. government company that provides deposit insurance to depositors of U.S. banks.)
AriseBank also allegedly did not reveal the criminal background of the top executives.
Stephanie Avakian, co-director of law enforcement at the SEC, commented: “We declare AriseBank and its principals trying to raise hundreds of millions of dollars from investors by distorting the company as the first decentralized bank to offer its own digital currency for a broad Customer products and services.
She added: “We seek emergency relief to prevent investors being victims of what we call out-of-the-box scams.”
Steven Peikin, co-head of law enforcement at the Securities and Exchange Commission, said it was the first time the European Commission has appointed a receiver to deal with ICO fraud.
He stressed: “We will use all our tools and remedies to protect investors from investors who engage in fraud in the emerging digital securities markets.”
Shamoil T. Shipchandler, director of Fort Worth Regional Office at the U.S. Securities and Exchange Commission, said: “Attempting to hide fraudulent securities under the technical terms we call” ICO “or” cryptocurrency “does not prevent the committee from neglecting or protecting investors s hard work.”
The U.S. Securities and Exchange Commission intervened to protect digital assets so they could be dissipated, enabling receivers to immediately secure the various cryptocurrencies held by AriseBank, including Bitcoin, Litecoin, Bitley, Bitcoin and BitUSD.
The SEC said it seeks “a preliminary and permanent ban that spurs ill-gotten gains plus interest and penalties” and bars Rice and Ford from serving as public officers or directors, or again providing the future of digital securities.
The FBI, the North Texas District Attorney’s Office, the U.S. Federal Deposit Insurance Corporation, the U.S. Patent and Trademark Office, and the Texas Department of Banking provided assistance with the AriseBank investigation.
For the advantages of decentralized banks in the cryptocurrency space, Forex and password market traders Siim Cuunap said: “With the increasing popularity of cryptography, there will be inevitable a decentralized (encrypted) bank in the near future.” Future And, like bitcoin, the first one will bring the world into a storm. ”
The Estonians in Tallinn added: “As more and more people need access to encrypted banks, more and more businesses want encrypted payment, and that service is needed, except for excitement, which looks better, The more we need to understand its legitimacy. ”
Although the Securities and Exchange Commission (SEC) is unlikely to become the last thing we will see to step up efforts to combat ICO fraud and other securities abuse. Nevertheless, investors should accept some reasonable advice before entering such an investment.
Just as the former Ethereum co-founder Charles Hoskinson founded IOHK, a leading blockchain development company in 2015, once told me about investing in ICO: “Before buying ICO, One suggestion is to understand the project’s white paper and the product or service. The truth is that if you do not understand the white paper, do not buy it. ”
In addition, Americans from Boulder, Colorado, over the past two years, the IOHK team designed Cardano, an industrial blockchain, emphasizing that potential investors should not devote more money – ICOs include – more than they can afford to lose And understanding these vehicles is very speculative. ”
In addition you should know the team behind any project. Hoskinson said: “They must interact, they must understand and understand their history and background, incentives … but also a broader understanding of the team’s philosophy. Also understand the evolution of products or services and their natural needs , And what Hoskinson calls “technical risk and project execution risk.”
The SEC’s Investor Education and Advocacy Office also issued an investor warning in August last year to remind investors about the fraud of companies claiming to be involved in ICO.