The FBI arrested Wednesday the CEO of cryptocurrency firm AriseBank on charges for defrauding investors for over $4 million. A statement with details was released by the Attorney’s Office for the Northern District of Texas, and published on the Department of Justice website.

"AriseBank CEO Jared Rice, Sr. was arrested by the FBI on Wednesday, charged with duping hundreds of investors out of more than $4 million in a cryptocurrency scheme," the statement said, citing Erin Nealy Cox, Attorney for the Northern District of Texas.

Rice allegedly misled potential investors into believing that AriseBank — which he promoted as the world’s “first decentralized banking platform” based on a proprietary digital currency called AriseCoin — could offer consumers Federal Deposit Insurance Corporation (FDIC)-insured accounts and traditional banking services, including Visa-brand credit and debit cards, along with cryptocurrency services.

This sort of promotion was done when AriseBank had not been allowed to conduct banking in Texas, was not FDIC-insured, and did not have any sort of alliance with Visa. Consequently, he was charged for both securities fraud and wire fraud. Rice was also the subject of a civil action lawsuit filed by the SEC’s Fort Worth regional office earlier in 2018.

In the offer and sale of AriseCoin, Rice omitted to state material facts that were necessary for investors to make an informed decision.

"Rice has pleaded guilty to the state felony crimes tempering with Government Records for forging a Texas Secretary of State Incorporation document, and Theft of Property Valued More Than or Equal to $1,500 and less than $20,000, for stealing funds provided by an investor in a prior internet-related business scheme and is currently on probation for these offenses," the indictment report of Rice read.

Even as he promoted AriseBank’s unreal benefits in press releases and on the internet, Rice used investor funds for personal spending, using the money on hotels, food, clothing, a family law attorney, and even a guardian ad litem — a person the court appoints to investigate what solutions would be in the “best interests of a child."

Rice also falsely claimed his initial coin offering had raised $600 million within just a few weeks of the offering. He also regularly transferred investors' ethereum currency to a non-AriseBank Coinbase account, exchanged the ethereum into dollars and then transferred those to another bank account at Bank of America, one that he controlled.

“My office is committed to enforcing the rule of law in the cryptocurrency space. The Northern District of Texas will not tolerate this sort of flagrant deception – online or off," Cox said in the statement.

"An Indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless convicted through due process of law. If convicted, Mr. Rice faces up to 120 years in federal prison," the statement read.