Key Takeaways:
- Stollery is accused of running an unregistered ICO, falsifying aspects of TBIS’ white papers, and planting fake client testimonials.
- The Titanium Blockchain CEO could face a 20-year prison term if found guilty.
- He was originally charged with securities fraud by SEC in 2018.
The U.S. Department of Justice(DOJ) announced that Michael Stollery, the CEO of Titanium Blockchain Infrastructure Services(TBIS), has pleaded guilty to securities fraud. He was allegedly involved in a scheme that brought in $21 million through a fraudulent initial coin offering (ICO).
According to the court filing, Stollery touted TBIS as a cryptocurrency investment opportunity and lured investors to purchase “BAR,“-the cryptocurrency token offered by TBIS, through false and misleading statements. DOJ’s press release states that the Titanium Blockchain CEO had admitted to forging the token’s white paper and user endorsements of the coin on its site to trick customers.
The press release further adds that Stollery also admitted to using investor funds for his personal needs, including paying his credit card payments and bills on his Hawaii home. DOJ accuses Stollery of not registering the ICO regarding TBIS’s cryptocurrency investment offering with the SEC. DOJ adds that Titanium Blockchain also lacked a valid exemption from the SEC’s registration requirements.
On top of running an unregistered ICO, Stollery allegedly lured customers by falsifying aspects of TBIS’ white papers, planting fake client testimonials, and claiming a relationship with prominent businesses and the Federal Reserve on the company’s website.
According to his lawyer Andrew Holmes, Stollery is Mr. Stollery is currently out of custody on a signature bond. He is scheduled to be sentenced on November 18, 2022. If found guilty, Stollery could land a 20-year prison term.
The guilty plea followed after SEC 2018 initially charged TBIS and Stollery for security fraud. The court then approved and obtained an emergency order freezing Titanium Blockchain’s ICO and the appointment of a receiver to hold the firm’s assets.
In 2018, Stollery and his firm TBIS were charged for violating the SEC’s antifraud and registration provisions concerning a multi-million dollar token sale. SEC alleges that CEO fabricated and claimed to have business relationships with the Federal Reserve and high-profile companies such as PayPal Holdings Inc., Verizon Communications Inc., Disney, etc.
Recently SEC has been doubling down on companies it believes engage in crypto fraud. The latest Titanium Blockchain development comes amid SEC initiating a probe to look into crypto firm Coinbases’ alleged security fraud case. Last week, an Ex-coinbase manager was arrested by DOJ in the first ever insider trading case involving crypto.
