(Reuters) — Cryptocurrency startup AriseBank will pay $2.3 million to the U.S. Securities Exchange Commission to settle accusations of defrauding investors through claims such as building a cryptocurrency bank.
AriseBank founders Jared Rice and Stanley Ford will pay civil penalties of $184,767 each and will be prohibited from serving as officers of public companies or participating in offerings of digital securities, the SEC said in a statement.
The company is one of the first to be sued by U.S. regulators over its initial coin offering.
Earlier this year, the SEC had halted what it alleged was a fraudulent initial coin offering by AriseBank to raise $1 billion for its "AriseCoin" cryptocurrency, which was considered one of the largest initial coin offerings ever.
The SEC had said it obtained a court order to halt AriseBank's efforts to target investors, alleging that the entity had "falsely stated that it purchased an FDIC-insured bank" and had "omitted to disclose the criminal background of key executives."
The court had also ordered the freezing of AriseBank's assets, while approving the appointment of a receiver for those assets tied to the ICO fraud.
Japanese cryptocurrency firm Tech Bureau Corp. said that hackers stole about $60 million in digital currencies from its exchange on Sept. 14, Reuters reported. Tech Bureau said that hackers stole virtual currencies including bitcoin, monacoin and bitcoin cash of which JPY 4.5 billion belonged to customers.