Initial coin offerings have come under fire by regulators some time ago. A lot of project issue securities without adhering to existing regulations. As such, as the agency is now halted the AriseBank ICO altogether. They even obtained a court order to freeze all assets as well. For a project which quickly raised $600m, things are not looking all that great now.
The AriseBank ICO has a lot of potential. If the team is to be believed, they will create a decentralized bank. To do so, they need a lot of startup capital. Hosting an initial coin offering seems to be the right way to go in this regard. With over $600m raised already, there seems to be a genuine interest in this project as well. Unfortunately, the project got on the radar of the SEC for all the wrong reasons. Thanks to a court order, the company’s assets have now been frozen completely.
Curtain Call for the AriseBank ICO
More specifically, the complaint has been filed in Dallas, Texas. According to the SEC. AriseBank has raised $600m through dissemination tactics. Using celebrities to promote an ICO is nothing new in this industry, though. Floyd Mayweather has shilled various ICOs over the past few months through Instagram, for example. However, with the court approving this emergency asset freeze, it seems things will unfold in a very different manner.
The official complaint explains how this ICO is an illegal offering of securities. It is not the first time such statements are issued by the SEC. AriseBank has clearly fallen into a big trap in this regard. The company failed to register with the proper authorities, which is always asking for trouble. Especially since there’s no legal ground for them to be exempt from registration. For the time being, their assets will remain frozen until further notice. It is a worrisome development, albeit one that won’t surprise too many people either.
Moreover, it seems AriseBank falsely claimed to have purchased a Federal Deposit Insurance Corporation-insured bank. That is a criminal offense in the US and will open the floodgates for more legal trouble. Just by calling the project a decentralized bank doesn’t mean they can do anything. According to the SEC, their goal is to recover the funds and bar to co-founders from being part of any public company. It is a harsh course of action, but one which can also be justified at this stage.
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