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| US blocks $600m coin offering by 'scam' bank | US blocks $600m coin offering by 'scam' bank |
| (about 1 hour later) | |
| US regulators have frozen the assets of a company that was raising money by selling its own cryptocurrency, accusing it of fraud. | US regulators have frozen the assets of a company that was raising money by selling its own cryptocurrency, accusing it of fraud. |
| The Securities and Exchange Commission (SEC) said AriseBank failed to register its activity and falsely claimed it had purchased a US bank. | The Securities and Exchange Commission (SEC) said AriseBank failed to register its activity and falsely claimed it had purchased a US bank. |
| It also said Arise did not disclose the criminal background of key executives. | It also said Arise did not disclose the criminal background of key executives. |
| Arise has blamed the dispute on "confusion" over its activities and cryptocurrencies. | Arise has blamed the dispute on "confusion" over its activities and cryptocurrencies. |
| Arise, which described itself as the first decentralised banking platform for cryptocurrencies, started raising money for the company last year, through an offering of AriseCoin, its own digital currency. | Arise, which described itself as the first decentralised banking platform for cryptocurrencies, started raising money for the company last year, through an offering of AriseCoin, its own digital currency. |
| Earlier this month, it claimed to have raised $600m (£425m) and successfully completed the purchase of a traditional US bank, with federally insured deposits. It said it expected the offering to exceed $1bn. | Earlier this month, it claimed to have raised $600m (£425m) and successfully completed the purchase of a traditional US bank, with federally insured deposits. It said it expected the offering to exceed $1bn. |
| The SEC complaint said the bank in question was not federally insured, nor was the purchase complete. | The SEC complaint said the bank in question was not federally insured, nor was the purchase complete. |
| It said it was filing the action to "halt an ongoing, fraudulent, and unregistered offering of securities and to protect investors who are being actively defrauded". | It said it was filing the action to "halt an ongoing, fraudulent, and unregistered offering of securities and to protect investors who are being actively defrauded". |
| The SEC also said chief executive Jared Rice Sr is on probation for felony theft and tampering with government records, while president Kelvin Spencer served a five-year sentence for felony robbery. | |
| Efforts to reach Arise executives were unsuccessful, but 29-year-old Mr Rice told radio interviewer Connie Willis that the firm would fight the action, blaming the raid on confusion. | Efforts to reach Arise executives were unsuccessful, but 29-year-old Mr Rice told radio interviewer Connie Willis that the firm would fight the action, blaming the raid on confusion. |
| "We have nothing to hide," said Mr Rice. "Everything that we're working on, we're very proud of." | "We have nothing to hide," said Mr Rice. "Everything that we're working on, we're very proud of." |
| Broader crackdown | Broader crackdown |
| The action against AriseBank extends warnings from regulators about initial coin offerings or ICOs, which are on the rise. | The action against AriseBank extends warnings from regulators about initial coin offerings or ICOs, which are on the rise. |
| More than $3.5bn had been raised globally in the first 11 months of 2017, according to CoinDesk research site. | More than $3.5bn had been raised globally in the first 11 months of 2017, according to CoinDesk research site. |
| The practice has drawn scrutiny, as regulators in Singapore, Hong Kong and Canada and the UK have warned of risks. | The practice has drawn scrutiny, as regulators in Singapore, Hong Kong and Canada and the UK have warned of risks. |
| China banned such fundraisers last autumn. | China banned such fundraisers last autumn. |
| Last month, SEC Chair Jay Clayton said many offerings of coins or tokens appear to be securities by another name, and therefore subject to standard securities law. | Last month, SEC Chair Jay Clayton said many offerings of coins or tokens appear to be securities by another name, and therefore subject to standard securities law. |
| He said he had directed the agency to "police this area vigorously". | He said he had directed the agency to "police this area vigorously". |
| That same day the SEC announced that California company Munchee had halted its coin offering. | That same day the SEC announced that California company Munchee had halted its coin offering. |
| The SEC said the Arise case is the first in which the agency has appointed a receiver to take over the firm's assets. | The SEC said the Arise case is the first in which the agency has appointed a receiver to take over the firm's assets. |
| "We sought emergency relief to prevent investors from being victimised by what we allege to be an outright scam," Stephanie Avakian, co-director of the SEC's enforcement division, said in a statement. | "We sought emergency relief to prevent investors from being victimised by what we allege to be an outright scam," Stephanie Avakian, co-director of the SEC's enforcement division, said in a statement. |