The cryptocurrency space has gone to great lengths to ensure that institutional money eventually flows into the sector, and that wealthy investors understand that cryptocurrencies aren’t “scams”. However, a blow was dealt to the cryptocurrency world as the CEO of Dallas-based AriseBank has been arrested for allegedly defrauding hundreds of investors. Jared Rice Sr, 30, was arrested on Wednesday by the FBI after his indictment was unsealed. The indictment carries three counts of securities fraud and wire fraud each.

Previous SEC Halt

This is not the first time AriseBank has been under scrutiny. The SEC shut down the AriseBank ICO after it claimed to have raised $600 million. The ICO was even endorsed by boxing legend Evander Holyfield, who tweeted about the project twice in January 2018. In return, AriseBank had agreed to pay Holyfield 2.5 million Arisecoins, and were selling the tokens at above a dollar during its ICO. The SEC had previously discouraged against ICO celebrity endorsements in 2017, indicating that it would crack down on the cryptocurrency sector and endorsements.

False Claims

AriseCoin boasted a 100-page whitepaper, with ambitious language. One excerpt of the whitepaper stated that “Arisecoin is a new digital currency that enables the global economic system the world has been waiting for,” and then vaguely claiming “this new economic system combines capitalism and socialism, while removing their defects. The SEC halted the ICO earlier this year. The project claimed that it was involved in partnerships and acquisitions that were proved to be false.

Specifically, AriseBank had no banking authorization in Texas, and no partnership with Visa, although the project did illegally make these claims to investors. The indictment alleges that Rice spent the money raised for the project on hotels, food, clothing, and his girlfriend.

In an interview with Forbes earlier this year; Rice strangely admitted that he felt that this was inevitable. He stated: “I said this to every single person I worked on this project with – they’re going to come. I didn’t know they were going to come so soon, but I knew they would.”

Rice faces up to 120 years in prison if convicted on all counts, and the indictment can be found here.