(Reuters) – Cryptocurrency startup AriseBank will pay $2.3 million to the U.S. Securities Exchange Commission (SEC) to settle accusations of defrauding investors through claims such as building a cryptocurrency bank.
AriseBank founders Jared Rice and Stanley Ford will pay civil penalties of $184,767 each and will be prohibited from serving as officers of public companies or participating in offerings of digital securities, the SEC said in a statement.
The company is one of the first to be sued by U.S. regulators over its initial coin offering.
Earlier this year, the SEC had halted what it alleged was a fraudulent initial coin offering by AriseBank to raise $1 billion for its “AriseCoin” cryptocurrency, which was considered one of the largest initial coin offerings ever.
The SEC had said it obtained a court order to halt AriseBank’s efforts to target investors, alleging that the entity had “falsely stated that it purchased an FDIC-insured bank” and had “omitted to disclose the criminal background of key executives.”
The court had also ordered the freezing of AriseBank’s assets, while approving the appointment of a receiver for those assets tied to the ICO fraud.