This week the Texas Department of Banking Commissioner, Charles G. Cooper, issued a cease and desist order to an alleged ‘decentralized cryptocurrency-bank’ called Arise Bank. The commissioner explains the startup unlawfully claims to be a banking institution and its operations must stop engaging with residents from the state of Texas.
Also read: US Financial Regulator Requests Crypto Trading Data From South Korea
Arise Banks Alleged Purchase of a Century Old FDIC Bank and Bitshares Connections
Back in December, some headlines started to spread on the web about a partnership between Arise Bank and a 100-year-old FDIC insured bank in the U.S. Arise Bank is an initial coin offering (ICO) that claims to have many strategic alliances. The news initially spread its wings when it was published on the popular online publication the Huffington Post, but the story has since been scrubbed. A copied version of the story still appears on the financial website Zerohedge.
Arise Bank claimed to be a “decentralized cryptocurrency bank” that offers a 100-page white paper, financial management services, debit cards, and an ICO. Further, Arise bank has associations with Bitshares community and the well-known developer Stan Larimer had also written about the project on Steemit. Unfortunately for Arise Bank, there’s a lot of people who question the legitimacy of its services and state that lots of its so-called operations are non-existent.
Texas Banking Commissioner: ‘Arise Bank Must Stop Implying That They Engage in the Business of Banking in Texas’
Now the Texas Department of Banking wants Arise Bank to cease its operations immediately and details that the startup has violated the state’s financial statutes.
“The Cease & Desist Order was based on the Commissioner’s finding that Arise Bank violated Texas Finance Code Chapter 31 by using the term “bank” in its name and marketing materials to imply that it is in the business of banking in this state — The order requires Arise Bank to cease and desist from implying that they engage in the business of banking in Texas. Arise Bank is further required to clearly disclose that they do not offer their services to consumers in Texas,” explains Commissioner Charles G. Cooper.
In accordance with Texas Finance Code §§ 31.005 and 35.207, Respondents are ordered to cease and desist from implying that they engage in the business of banking in Texas, whether through the website www.arisebank.com or any other online site or profile.
A Scam or a Victim of Libel and Slander?
Scouring the internet searching for information about Arise Bank shows a lot of forum and blog posts claiming Arise Bank is a “scam.” However, the startup’s founder Jared Rise and representatives from Arise Bank believe they are “victims of libel and slander.” One particular Medium blog post that aims to prove the project is fishy is questioned for starting the rumors regarding Arise Bank, and the company addresses each point written in the article.
The editorial basically states that Arise Bank’s operations are shady and much of what it claims doesn’t really exist.
“A post has been circulating around the web that was posted by someone who was funded to post it with completely false information,” Jared Rice, the co-founder of Arise Bank explains. Rice believes the post is misleading and every issue raised contains data that can be “easily proven false.”
Texas Deputy Commissioner Says Arise Bank’s Dallas Offices Do Not Exist, While U.S. Regulators Plan to Sue the Startup
Rice has also responded to the Texas Banking Commissioners letter in a statement made on Steemit. The co-founder says the project is a decentralized banking entity and it will not comply with removing the word “bank” from the company name. Further, Rice claims that the SEC and FBI special agents raided his office drawing guns on a team of programmers who were coding all night.
“The software cannot be erased nor does the State of Texas have any sort of regulations that prevent any of our Texas-based users from storing cryptocurrencies on their computers or cellular devices using the Arise Bank platform,” explains Rice’s response to the cease and desist order.
Additionally, the U.S. Securities and Exchange Commission (SEC) is taking Arise Bank to court according to the SEC’s recently filed reports. The U.S. regulatory agency says Arise Bank’s operations are a “fraudulent offering” and none of Arise’s businesses have ever registered with the SEC. The public document details that the ‘decentralized bank’s’ promises were misleading to retail investors.
After Rice’s response, the deputy commissioner of the Texas Department of Banking, Bob Bacon, told the publication American Banker that Arise Bank is prohibited from using the word “bank” in its name unless it’s approved by the state. Additionally, Bacon explains in his interview that the Texas Department of Banking has tried to visit Arise Bank’s offices in Dallas but found the physical locations are non-existent.
What do you think about Arise Bank getting a cease and desist order for using the word “bank” in its name? Let us know what you think of this story in the comments below.
Images via Shutterstock, Arise Bank, Steemit, and the Texas Department of Banking.
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