AriseCoin inventor, Jared Rice, Sr., has been sentenced to five years in federal prison by Texas authorities. Aside from the jail time, he would have to repay $4.2M to investors who were defrauded through his crypto scheme.
According to a news release issued by the US Department of Justice, Jared Rice, Sr. will be imprisoned for the next 60 months.
The American, who was the CEO of AriseBank and the creator of its native currency AriseCoin, admitted to defrauding investors and stealing more than $4 million in digital assets.
The 33-year-old claimed that AriseBank was the world’s “first decentralized banking platform” to his customers. He also praised the cryptocurrency AriseCoin as an asset that could provide clients with FDIC-insured accounts as well as typical banking services like Visa-branded credit cards.
AriseBank, on the other hand, did not have a license to conduct business in Texas. The financial institution has no ties to Visa and was not covered by the FDIC.
Hundreds of investors, on the other hand, were duped into investing $4.2 million in AriseCoin using major virtual assets including Bitcoin, Ethereum, Litecoin, and fiat currencies.
Rice, for his part, used the monies to benefit himself, such as staying in high-end hotels, transportation, food, a family law attorney, and even a guardian ad litem. He was ordered by the Texas Supreme Court to return everything to the duped people.
He also failed to disclose his involvement in a previous internet-related business plan, according to the Department of Justice.
Water Loo for ‘Doctor Bitcoin’
Mark Hopkins, commonly known as “Doctor Bitcoin,” pled guilty to accusations of conducting an illicit cash-to-crypto operation in early July. For his conduct, he now risks a prison sentence.
Hopkins allegedly ran his firm by changing US cash into digital assets, namely BTC, for a charge, according to the allegations. On several occasions, he admitted to ignoring the process of verifying the funds’ source.
In September 2019, for example, Hopkins was approached by an unidentified man with the initials “M.H.” who wanted to exchange cash for Bitcoin.
Despite the fact that the funds came from a Nigerian lottery scam, “Doctor Bitcoin” approved the procedure. Hopkins even instructed “M.H.” to work with deposits of less than $9,500 and to deceive financial institutions.
“Doctor Bitcoin” admitted to carrying out 37 transactions with the criminal over the course of a year, converting between $550,000 and $1.5 million.
He had no license to operate in Texas, according to the Federal Bureau of Investigation’s Dallas Field Office, which examined the matter.
Hopkins also failed to validate his clients’ personal information, which is required by law to prevent thieves from stealing their assets.
Pleading guilty, on the other hand, would result in a reduced prison sentence of up to five years.