The Securities and Exchange Commission obtained a court order halting an allegedly fraudulent initial coin offering via Dallas-based AriseBank, which was endorsed by former professional boxer Evander Holyfield.

AriseBank targeted retail investors to fund what it claimed to be the world’s first “decentralized bank.”

According to the SEC’s complaint, filed in federal district court in Dallas and unsealed late Monday, AriseBank used social media, Holyfield’s endorsement, and other “wide dissemination tactics” including press releases to raise what it claims to be $600 million of its $1 billion goal in just two months through an initial coin offering of its own virtual currency, AriseCoin.

The SEC states that the offering was an “illegal offering of securities” because there was no registration statement filed or in effect with the SEC.

“Attempting to conceal what we allege to be fraudulent securities offerings under the veneer of technological terms like ‘ICO’ or ‘cryptocurrency’ will not escape the Commission’s oversight or its efforts to protect investors,” said Shamoil Shipchandler, director of the SEC’s Fort Worth Regional Office, in a statement.

Steven Peikin, co-director of the SEC’s Enforcement Division, added that the action against AriseBank is the first time the Commission has sought the appointment of a receiver in connection with an ICO fraud. “We will use all of our tools and remedies to protect investors from those who engage in fraudulent conduct in the emerging digital securities marketplace,” he said.

The court approved an emergency asset freeze over AriseBank, Rice and Ford and appointed a receiver over AriseBank, including over its digital assets.  

The SEC intervened to protect the digital assets before they could be dissipated, enabling the receiver to immediately secure various cryptocurrencies held by AriseBank including Bitcoin, Litecoin, Bitshares, Dogecoin and BitUSD. 

According to the complaint, AriseBank and its co-founders Jared Rice Sr. and Stanley Ford allegedly offered and sold unregistered investments in their purported AriseCoin cryptocurrency by depicting AriseBank as a first-of-its-kind decentralized bank offering a variety of consumer-facing banking products and services using more than 700 different virtual currencies. 

AriseCoin’s public sale began around Dec. 26, 2017, and was originally scheduled to conclude on Jan. 27, 2018, with distribution to investors on Feb. 10.  

AriseBank’s sales pitch claimed that it developed an algorithmic trading application that automatically trades in various cryptocurrencies.

The SEC alleges that AriseBank falsely stated that it purchased an FDIC-insured bank, which enabled it to offer customers FDIC-insured accounts, and that it also offered customers the ability to obtain an AriseBank-branded Visa card to spend any of the 700-plus cryptocurrencies. 

AriseBank also allegedly failed to disclose the criminal background of key executives. In 2015, Rice was charged with felony theft and tampering with government records, the complaint states. He recently pleaded guilty and remains on probation.

Spencer, the complaint states, has multiple arrests and convictions. He served a five-year sentence for felony robbery and was released from prison in October 2015.

Investors in the AriseBank ICO who believe they may be a victim are asked to report it to the SEC as a tip or complaint.

— Check out SEC Warns: Celebrity Investment Endorsements Could Be Unlawful on ThinkAdvisor.