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.
— Evander Holyfield (@holyfield) January 5, 2018
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.