The U.S. Securities and Exchange Commission announced Tuesday it has obtained a court order to halt what is likely the largest initial coin offering ever.
The complaint was filed in Dallas, Texas, on Thursday and unsealed late Monday. It said Dallas-based AriseBank “used social media, a celebrity endorsement, and other wide dissemination tactics to raise what it claims to be $600 million of its $1 billion goal in just two months.”
The SEC alleges AriseBank “falsely stated that it purchased [a Federal Deposit Insurance Corporation]-insured bank which enabled it to offer customers FDIC-insured accounts.”
AriseBank calls itself a “decentralized bank” and announced Thursday it was correcting an announcement made the prior week about the acquisition of an FDIC-insured bank. Two websites for AriseBank were unavailable Tuesday morning.
The SEC seeks to recover the funds, and wants to bar the co-founders from serving as officers or directors of a public company, or offering digital securities in the future.
The Texas Department of Banking announced on Friday that it issued a cease and desist order on AriseBank in early January.
Fundraisers for projects based on the blockchain technology behind bitcoin are called token sales or initial coin offerings. They have raised more than $3.7 billion, but more than 10 percent of those funds have been lost to hackers, according to a study from Ernst and Young.