Titanium Blockchain boss pleads guilty to $21 million fraud

When Titanium Blockchain Infrastructure Services Inc. (TBIS) emerged, it billed itself as a research, development and consulting company that offered blockchain development services. It focused on exposing companies to useful blockchain technology and offered a comprehensive roadmap that included planning, product architecture and more.

But while the Tel Aviv-based firm seemed legitimate, there was a lot going on behind the scenes. It all came to a head with an initial coin offering (ICO) in 2018, which raised around $21 million in funding from investors both inside and outside the US.

That’s when the SEC stepped in, filing a complaint and freezing assets and other relief involving the ICO. The complaint was directed against Titanium Blockchain’s CEO, Michael Alan Stollery, a/k/a Michael Stollaire.

According to the SEC, he lied about business relationships with over 30 entities to obtain more funding, including relationships with the Federal Reserve, PayPal and The Walt Disney Company.

The lies were used in a social media marketing blitz that tricked investors with functional business prospects. The campaign included videos and social media that compared investing in ICOs to investing in “Intel or Google.”

But the scheme involved more than lies about relationships. Titanium Blockchain also forged certificates from business customers for use on the website. It seemed to create an illusion of credibility, which further helped dupe investors.

Stollery’s efforts drove demand for the digital asset during the ICO due to the big brands claimed to be partners. People didn’t want to miss out, and combined with the incentives dangled in front of them, many investors participated.

It was not until July 2022 that Stollery pleaded guilty to his role in the fraud scheme. At the time, he admitted to falsifying aspects of TBIS’s white papers to lure investors. The misleading information included an explanation of the crypto investment offering, which included the technology and purpose behind it, and its profitability.

Stollery also admitted to using fake testimonials and lying about dozens of business connections that brought the ICO credibility. But that wasn’t all. He went on to admit that the money invested was not used for its intended purpose.

The investor funds were allegedly commingled with his own money, and some of it was used to pay personal expenses unrelated to TBIS. The unrelated expenses include things like personal credit card payments and bills for his condo in Hawaii.

The charge Stollery pleaded guilty to was one count of securities fraud, for which he is scheduled to be sentenced in November. At that point, a federal district court judge will decide his sentencing, with Stollery potentially facing 20 years in prison.

Although there have been successful actions to try to get money back from defrauded investors, it is unlikely that the full amount will be returned.

The whole case just proves the importance of being careful with investments. That’s especially true in the crypto realm, with cryptocurrency scams and crypto-related lawsuits popping up on a regular basis.