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- The Securities and Exchange Commission on Tuesday announced it seized the assets of AriseBank and halted its initial coin offering.
- The company has touted partnerships with banks that do not exist, but says it will fight the SEC's accusations.
The CEO of AriseBank, which had its $600 million initial coin offering shuttered by regulators last week, has released a lengthy statement vowing to fight the Securities and Exchange Commission's accusations.
"Many people's dreams fail over time, it's simply a circumstance that surrounds us when we're trying to do something that can and will change the world," Jared Rice told initial coin offering supporters in the messaging app Telegram late Tuesday.
"AriseBank was and STILL IS a project that I gave my entire life to," Rice added. "I'm not hiding. I'm proud of what we've built and regardless of what happens, I can sleep at night knowing that I did my best, I gave it my all and I did it with all the right intentions."
In court documents unsealed Tuesday, SEC investigators in Texas allege AriseBank used celebrity endorsers and social media to swindle hundreds of investors out of at least $600 million of its $1 billion stated goal. A judge also appointed Mark Rasmussen, partner at global law firm Jones Day, legal "receiver" and neutral third-party to oversee the seized funds.
"This is the first time the Commission has sought the appointment of a receiver in connection with an ICO fraud," Steven Peikin, Co-Director of the SEC's enforcement division , said in a press release. "We will use all of our tools and remedies to protect investors from those who engage in fraudulent conduct in the emerging digital securities marketplace."
Two other banks which Arise said it had acquired stakes in, one outright and one a minority ownership, do not exist.
A former AriseBank executive, speaking to Business Insider under the condition of anonymity, said there was "zero paperwork" for the firm, and that Rice was using the LLC registration of his other company, marketing firm Dotoji, to do business.
"Arise, as far as I can tell, doesn't have any actual working products," the employee said. "Despite months of Jared's 'work' there is not much to show for it."
Still, Rice stands behind his vision for AriseBank and its ICO, AriseCoin as a way to disrupt traditional banking, avoid governmental monetary controls, and help bring banking services to the un- and under-banked people of the world.
"For us as people, the day has come for us to speak on the disruption of blockchain, why the government wants to attack it and why WE THE PEOPLE deserve a fair shake at regulating it, for us - not them," Rice said. "We have to build upon this - we have to fight."
A court date has been set for February 8 in the US District Court for the Northern District of Texas. Jones Day says investors who lost money can contact the firm at mail@arisebankreceiver.com for more information about their investment.