Two former AriseBank executives have reportedly been fined $2.5m over fraud allegations surrounding an ICO.
The US Securities and Exchange Commission originally acquired a court order in January to stop the ICO of the cryptocurrency AriseCoin, according to a report from FinTech Futures. Issues were raised around the bank’s use of social media, celebrity endorsements and other ‘wide dissemination tactics’ used to promote the token, it said.
By implementing these methods, its ICO was able to raise $600m of its $1bn goal in just two months.
Following on from this, the SEC has taken action against the former AriseBank CEO Jared Rice Sr, and former COO Stanley Ford, the article reports. The SEC has accused the executives of pitching the company as the ‘first-of-its-kind decentralised bank offering a cryptocurrency’ to be used for customer services and products.
As a result, both Rice and Ford will be given a life-time officer-and-director bar and digital securities bar, in order to prevent a repeat offence.
As settlement of the charges, both agreed to pay a joint $2.2m in disgorgement, and $68,423 in prejudgement interest. On top of this, individually they will pay a $184,767 penalty.
The SEC is still assessing the ICO market, as many regulators are, in trying to understand the best way to regulate the market.
Last week, the SEC postponed its decision regarding the approval or disapproval of Bitcoin exchange-traded fund (ETF) SolidX Bitcoin. The regulator has established a 27 February deadline for the decision of whether the shares can be traded on exchanges.
Copyright © 2018 RegTech Analyst
