Regulators have filed a suit against AriseBank, a Dallas firm for sale of tokens which the SEC deems unregistered securities. The firm with its founders were indicted by SEC a day after the government agency in charge of banking regulations in the state of Texas barred them from operations as a bank.
The company was one of those whose crowdsale was promoted by celebrities last December having secured the service of Evander Holyfield who backed the ICO by asking potential buyers to “Join the biggest fight in history”. The firm stated mid-January that its crowdsale had realized $600 million through the sale of AriseCoin token.
The SEC indictment revealed that the crowdsale, previously meant to end on January 27, had securities sold to United States citizen without being registered by SEC. The commission reiterated there were no restrictions placed to prevent the purchase of the said unregistered securities to citizens of the United States.
The charge against the team read that it employed misleading tactics in convincing investors who bought their tokens. One of such was a social media release which maintained that SEC did not have the right to stop any business from offering stocks and that company’s token should not come under the supervisory activities of the investment watchdog.
There was another Facebook post stating that there was an upcoming contest with the agency. They charge read that AriseBank made assertions of acquisition of a hundred-year-old bank. That the acquired bank was insured by FDIC brought the ire of SEC which disproved the claim and labeled it grossly misleading.
AriseBank later issued a release withdrawing their earlier stance that the acquisition was insured by FDIC, although not without adding that such insurance is not mandatory.
Apparently incensed with the firm’s stance, the charge apparently overshot in referring to the company’s chief executive as a convicted felon, an impression which the commission later retracted and apologized to Mr. Kelvin Spencer, president of AriseBank. In the volte-face, SEC admitted that it was a mistaken identity with another individual bearing the same name and physical features. Interestingly, they thanked Mr. Spencer for his cooperation in clearing the issue.
The AriseBank which had targeted to realize $1 billion had succeeded in raising $600 million, making it the biggest crowdsale till date. The suit filed in a Dallas court insisted that the money was raised within a couple of months due partly to the employment of assertions that were untrue in their promotional campaigns.
AriseBank enjoyed publicity and endorsements from many in the crypto community such as Stan Larimer, founder of Bitshares, which had earlier announced a partnership with AriseBank.
Michael Taggart, a contributor to Huffington Post previously praised the vision of AriseBank as one with the potential to rattle the established system. He also seemed to have predicted the company might be on a collision course with SEC. When contacted by reporters, Mr. Taggart maintained that he was strongly in support of AriseBank, saying that SEC seems undertaking trial of the company in the court of public opinion because the agency lacks understanding of the technology as well as what it portends for society.
The court action was initiated on Thursday and revealed Monday is seeking to halt AriseBank crowdsale, appoint an independent custodian for the $600 million crypto assets raised by AriseBank, bar owners of the business from holding offices in a public company as well as restrict them from conducting future initial coin offerings.
The regulatory agency succeeded in obtaining an expeditionary freeze on the company’s assets. The Dallas court has appointed Mark Rassmussen, a Dallas based lawyer custodian of the assets.