AriseCoin’s Inventor Embezzled More Than $4 Million in a Crypto Scam, Goes to Prison for Five Years

The authorities in Texas sentenced the CEO of AriseBank – Jared Rice, Sr. – to spend the next five years in federal prison. Apart from the jail time, the criminal would have to restore approximately $4,250,000, which he embezzled from investors throughout his cryptocurrency-related schemes.

Justice at Last

According to a recent press release from the US Department of Justice, Jared Rice, Sr. will spend the next 60 months behind bars. The American, who was in charge of AriseBank and inventor of its native token AriseCoin, admitted luring investors into his crypto scheme and stealing more than $4 million worth of digital assets.

The 33-year-old lied to his customers that AriseBank was the world’s “first decentralized banking platform.” He was also praising the cryptocurrency AriseCoin as an asset that could offer clients Federal Deposit Insurance Corporation (FDIC)-insured accounts and traditional banking services such as Visa-brand credit cards.

In reality, though, AriseBank did not have a license to operate in the state of Texas. The financial institution had no connection with Visa and was not FDIC insured.

However, hundreds of investors fell victims to his fraud as they collectively purchased around $4.2 million in AriseCoin employing popular virtual assets like Bitcoin, Ethereum, Litecoin, and fiat currencies.

In his turn, Rice spent the investors’ funds for his own benefits, such as staying in expensive hotels, transportation, food, a family law attorney, and even a guardian ad litem. The Texas high court ordered him to restore everything to the conned people.

The Department of Justice also mentioned that he did not reveal taking part in a previous internet-related business scheme.

‘Doctor Bitcoin’ Also Goes to Prison

CryptoPotato recently reported about another similar case that happened in Texas. At the beginning of July, Mark Hopkins – also known as “Doctor Bitcoin” – pleaded guilty on charges against running an illegal cash-to-crypto scheme. He now faces a prison sentence for his actions.

Per the accusations, Hopkins managed his business by converting US dollars to digital assets, mainly BTC, for a fee. However, he admitted that he ignored the process of verifying the cash source on numerous occasions.

For example, in September 2019, an anonymous man with the initials “M.H.” approached Hopkins to exchange dollars to BTC. It turned out that the money came from a lottery scam in Nigeria, but “Doctor Bitcoin” still allowed the operation. Hopkins even advised “M.H.” to operate with deposits under $9,500 and urged him to lie to financial institutions.

“Doctor Bitcoin” confessed that he executed 37 transactions with the criminal for one year and converted between $550,000 and $1.5 million. The Federal Bureau of Investigation’s Dallas Field Office, which investigated the case, noted that he had no license to operate in the state of Texas. Moreover, Hopkins failed to authenticate his clients’ personal information – important legislation that prevents criminals from using their assets.

Pleading guilty, though, would grant the criminal a reduced prison sentence of a maximum of five years behind bars.