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Houston Chronicle: CEO arrested on wire and securities fraud charges

Texas-based AriseBank billed itself as "the world's first decentralized bank." But the Houston Chronicle reports that federal law enforcement officials recently arrested the CEO of the Dallas firm, alleging that he was part of a cryptocurrency scheme that defrauded investors of more than $4 million.

AriseBank CEO Jared Rice Sr. has been charged with three counts each of wire fraud and securities fraud.

U.S. Attorney Erin Nealy Cox's office said Rice told potential customers that AriseBank could offer FDIC-insured accounts and Visa-brand debit and credit cards, as well as its own AriseCoin cryptocurrency services. In reality, prosecutors say, AriseBank is not FDIC-insured and "did not have any sort of partnership with Visa."

However, a statement on AriseBank's Facebook page earlier this year notes that the firm was in the process of acquiring "a 100-year old FDIC insured bank and a 25-year old investment bank."

The federal indictment states that "AriseBank was not a bank and had not been authorized by the Texas Department of Banking to conduct business."

FBI investigators claim that Rice falsely claimed that AriseCoin raised $600 million in just weeks. They also allege that Rice used investments for his personal use, spending the funds on food, clothing and hotels.

The federal government's Securities and Exchange Commission filed a complaint early this year against AriseBank, Rice and co-founder and COO Stanley Ford.

When the Texas Banking Commission issued a Cease and Desist order to force AriseBank to stop using the word "bank," Rice issued a statement on Facebook that he was refusing to comply and that his company had never presented itself as a "legacy bank," but had always been clear that it was "a cryptocurrency bank" with "the right to use that word just as a food bank or a sperm bank has the right to use it as well."

Those facing federal white collar charges should decline to speak to prosecutors until after they have discussed evidence and allegations with a Houston criminal defense attorney.

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