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Michael Kern

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Michael Kern is a newswriter and editor at Safehaven.com, Oilprice.com, and a writer at Crypto Insider. Michael has several years of experience covering cryptocurrencies, and…

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Investors Lost $4M In This Celebrity-Endorsed Crypto Scam

Crypto

Federal authorities have arrested the CEO of a cryptocurrency operator based in Dallas for allegedly defrauding investors out of $4 million in a digital coin scheme that legendary boxer Evander Holyfield had endorsed.

Jared Rice, Sr., the 30-year-old CEO of AriseBank was arrested Wednesday on charges of securities and wire fraud.

AriseBank has been under serious scrutiny since the beginning of the year, when the SEC brought a complaint against the company and the Texas Department of Banking issues a cease-and-desist order.

Alarm bells started ringing when Arise began advertising itself as offering FDIC-insured accounts on what it claimed was the world’s first decentralized banking platform. It also claimed to have FDIC-insured Visa credit cards.

Arise was none of this, and it certainly wasn’t FDIC insured, or authorized to conduct banking of any kind in the state of Texas. It also didn’t have a Visa partnership, according to prosecutors.

Some $4 million dollars of investment in Arise Coin later, and Arise has fallen—hard, and taken investors down with it.

According to prosecutors, Rice also “quietly converted investor funds for his own personal use, spending the money on hotels, food, clothing, a family law attorney, and even a guardian ad litem”.

He also “allegedly falsely claimed” that his ICO had raised $600 million “within just a few weeks”, and failed to disclose that he’d plead guilty to state felony charges in connection with an earlier online business scheme.

Holyfield appeared to think he was jumping into something that was going to help the millions of people left homeless after 2017’s superstorms through AriseBank and blockchain development company Cryptonomex, who allegedly said they were going to use BitShares to accelerate the recovery process in future disasters.

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“I am really excited about this. The more I can do, the better. Cryptocurrency seems to be a good way to help the causes that I care about,” Holyfield was quoted as saying back in January, right before the SEC shut Arise down.

This year has seen a lot of big moves to crack down on cryptocurrency fraud, with lawsuits up over 300 percent.

That alone should convince celebrities to stop lining up to attach their names to the next crypto calling.

From Katy Perry showing off her crypto manicure to Snoop’s Blockchain Week performances, celebrity interest in digital currencies has in some ways been construed as a sign of growing acceptance.

But increasingly, a celebrity name doesn’t mean you’re not going to get taken on a very expensive ride.

Evander Holyfield isn’t the first to be ‘crypto-ized’. In January, Steven Seagal endorsed the Bitcoiin ICO that claimed to be a better version of bitcoin. They reportedly raised $75 million and then bailed.

DJ Khaled and Floyd Mayweather Jr. also found themselves attached to the Centra Tech ICO that raised over $32 million, claiming it had a partnership with Visa (just like Arise). The project was targeted by the SEC and its founders were charged and indicted for fraud. Nor did the two celebrities come out of this without serious damage.

On Thursday, they settled charges with the SEC for failing to disclose payments they received for promoting the ICO investments. According to the SEC, Mayweather failed to disclose promotional payments from three ICO issues, including $100,000 from Centra Tech Inc. Khaled failed to disclose a $50,000 payment from Centra Tech after calling it a “game changer” on his social media account.

By Michael Kern for Safehaven.com

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