SEC: “The latest caper in the fast-moving world of initial coin offerings comes from a company that aimed to raise $1 billion and claimed to raise $600 million. In reality, it may not have raised much more than $1 million.
Federal regulators moved to halt the coin offering of Dallas-based AriseBank, in one of the biggest U.S. interventions yet into the world of raising money by issuing digital tokens.
Initial coin offerings have been an investing fad over the past year, attracting cash from technology investors and speculators drawn to the idea that the tokens will give them a profitable piece of the open-ledger ‘blockchain’ technology that backs bitcoin and other virtual currencies.
Regulators though have warned of increasingly blatant fraud in the coin offerings, and Facebook Inc. Tuesday said it would ban ads on its site for products including coin offerings and cryptocurrencies because they are ‘frequently associated with misleading or deceptive’ practices.
On Tuesday, the Securities and Exchange Commission separately said it obtained a court order, unsealed late Monday, that permits a receiver to seize cryptocurrencies held by AriseBank, which allegedly marketed and received the proceeds from the coin offering. The SEC called the deal a ‘scam’ and alleges the company and its executives misled investors about buying a federally insured bank and its ability to offer a VISA card backed by ‘any of 700-plus cryptocurrencies.’ “
-Dave Michaels and Paul Vigna, “SEC Moves to Stop $600 Million Digital Coin Offering,” The Wall Street Journal online, Jan. 30, 2018 06:27pm