Jared Rice, Sr., the inventor of AriseCoin, was sentenced to five years in federal prison on Wednesday for his role in a scam that bilked investors out of $4.25 million.

Rice, 33, was also the CEO of AriseBank, described as the world’s “first decentralized banking platform.” 

Hundreds of investors spent a collective $4.25 million in fiat currency and cryptocurrencies like bitcoin and ether to purchase AriseCoin. Rice must pay that amount in restitution, according to the sentencing. 

Although Rice told investors that accounts at AriseBank were FDIC-insured and that the bank would issue Visa-brand credit cards, AriseBank was not authorized to conduct banking in Texas, was not FDIC insured, and was not partnered with Visa. 

Rice was arrested in Texas in 2018 and  pleaded guilty to one count of securities fraud in 2019.

Instead of investing the money in AriseBank, the Securities and Exchange Commission (SEC) says Rice spent investor funds on personal items, including hotels, food, transportation and attorney fees.

Rice previously pled guilty to state felony charges related to a previous “internet-related business scheme,” which he did not disclose to investors.

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