Texas suspends operation of cryptocurrency banking platform AriseBank for violating regulations

Texas suspends operation of cryptocurrency banking platform AriseBank for violating regulations

Posted on Posted in Bitcoin, Blockchain, Cryptocurrency, Cryptocurrency News, United States, What's Trending Now

 

Texas financial authorities are increasing their regulatory scrutiny over activities related to cryptocurrency.
 
According to a press release issued on Friday (January 26), the Texas Department of Banking said its cease-and-desist order issued to cryptocurrency banking platform AriseBank has taken effect, barring its services in the state.
 
Charles​ ​G.​ ​Cooper, the department’s banking commissioner, said the firm has been promoting and offering banking services while not chartered or authorized to engage in banking in the state, and is “not supervised by or registered with any Texas or federal regulatory agency.”

 

 

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The order said the company has violated the Texas Finance Code Chapter 31 and thus AriseBank is required to “cease and desist from implying that they engage in the business of banking in Texas” and to clarify that it will not offer services to Texas residents.
 
According to the original order that was issued on January 5, AriseBank had 21 days to appeal. Yet, since no submission was received, the department said the order is final and non-appealable.
 
During an interview with the podcast Coast to Coast AM on January 27, AriseBank’s co-founder and CEO Jared Rice, Sr. said the Securities Exchange Commission (SEC) and the Federal Bureau of Investigation (FBI) conducted a raid on the company’s office on Friday (January 26). According to Rice, AriseBank’s asset and funds raised from initial coin offerings were seized by the law enforcement.
 
While the website of AriseBank is currently unavailable, a previous press release and historic data captured by Archive.org shows that the firm touts a “decentralized banking platform” that includes storage, exchange and payment services, as well as Visa cards linked to crypto accounts.
 
The website also promoted Evander Holyfield, the former professional U.S boxer, as its “official AriseBank endorser.” However, Holyfield has not commented on the particular issue.
 
In its press release — dated Jan. 25, just one day before the appeal deadline — AriseBank said that, since the company adopts a decentralized model and does not hold user’s funds at custody, “it is wholly unnecessary for the platform to be FDIC regulated or insured.”
 
The Federal Deposit Insurance Corporation (FDIC) is the U.S. federal agency that insures deposits and oversees financial institutions for consumer protection.
 
And yet, according to the same announcement, AriseBank was in the process of acquiring two FDIC-insured banks — KFMC Bank Holding Company and TPMG. Although AriseBank claims the two entities are well established with decades of history, little information about either KFMC or TPMG could be found online.
 
In addition, while the new order did not specifically target AriseBank’s recent ICO activity, it appears that the company’s token sale is still affected, as the ICO website is also not currently available. According to another press release from January 18, the platform said it raised $600 million within weeks around the end of 2017, and netted $500 million in the public token sale.
 
The action by the Department of Banking is the latest effort by Texas authorities to scrutinize services or products that pertain to cryptocurrency. Previously, the state has also issued a cease-and-desist order to a scheduled initial coin offering (ICO) by BitConnect, which was followed by the platform’s notable shut down.

 


 

*Featured Image via Brakpan Herald

 

 

 

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