The CEO of Titanium Blockchain Infrastructure Services (TBIS) has pleaded guilty to securities fraud charges after using “false and misleading statements” to convince investors to buy unregistered cryptocurrency tokens.
Titanium Blockchain CEO Pleads Guilty to Cryptocurrency Fraud Charges
Michael Alan Stollery, 54, of Reseda, California, admitted his role in a cryptocurrency fraud scheme involving TBIS’ initial coin offering (ICO) that raised about $21 million from investors both in the United States as well as abroad. His TBIS company pitched itself to investors as a cryptocurrency investment platform who were lured into buying “BARs” that purported to be legitimate cryptocurrency tokens, but which Stollery had not registered with the Securities and Exchange Commission (SEC ) from the US.
Investors Hooked by Crypto Fraud
Stollery has since explained that to attract investors, he falsified aspects of the TBIS white papers. The fakes allegedly provided investors and potential investors with an explanation of the cryptocurrency investment offer, which included the purpose and technology behind the offer, as well as how the offer differed from other cryptocurrency opportunities. It also misrepresented the profitability prospects of the offer.
Assistant Attorney General Kenneth A. Polite, Jr., of the Justice Department’s Criminal Division, announced the charges and the plea in court. Also present were Assistant Director Luis Quesada of the FBI’s Criminal Investigation Division and Acting Special Agent in Charge Cory Nootnagel of the Office of the Inspector General of the Board of Governors of the Federal Reserve and the Office of Consumer Financial Protection, Western Region.
Funds used by criminal crypto for Hawaii Condo
A statement on the Justice Department’s website further explained: “Stollery also planted false customer testimonials on the TBIS website and falsely claimed to have business relationships with the Federal Reserve and dozens of prominent companies to create the false appearance of legitimacy
“Stollery further admitted that he did not use the invested money as promised, but instead commingled the funds from the ICO investors with his personal funds, using at least a portion of the proceeds from the offering for non-TBIS related expenses such as credit card payments and paying bills for the Stollery’s Hawaii condominium.”
Stollery’s guilty plea comes four years after the SEC first obtained an emergency order to halt TBIS’s ICO in 2018. An emergency asset freeze was also approved and an trustee to hold the company’s assets.
One of the attorneys representing Stollery, Andrew Holmes, explained that the petition was the criminal follow-up to the SEC’s action. Holmes spoke to the Wall Street Journal and said the Stollery’s crimes were: “An overexuberance that went beyond what he should have done.”
Holmes also explained that most of the investors’ funds that were converted to cryptocurrency are in the receiver’s possession, and that Stollery has been cooperating with authorities since the beginning of the case. “He’s very remorseful,” Holmes added. “He wants to get as much money back as possible from those who put their money into it.”
The scammer faces up to 20 years
Stollery is scheduled to be sentenced Nov. 18 and could face up to 20 years in prison. A federal district court judge will determine any sentence and will take into account the US Sentencing Guidelines and other statutory factors.
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