Titanium Blockchain boss pleads guilty to fraud
Titanium Blockchain Infrastructure Services Inc.’s founder and CEO has pleaded guilty to his role in a cryptocurrency fraud scheme that involved raising about $21 million in an initial coin offering, the U.S. Department of Justice said.
Michael Alan Stollery, 54, of Reseda, California, pleaded guilty to one count of securities fraud in US District Court in Los Angeles on Friday after being charged in June.
Prosecutors alleged that Mr. Stollery, as the founder and CEO of crypto-investment platform Titanium Blockchain, enticed investors to buy “BARs,” a cryptocurrency issued by his firm, through false and misleading statements.
Mr. Stollery allegedly falsified white papers explaining how the underlying technology of the cryptocurrency works, planted fake testimonials on a company’s website and made business connections to attract potential investors for the company’s initial coin offering. Between November 2017 and at least January 2018, he raised about $21 million from investors in the United States and abroad, the Justice Department said.
Mr. Stollery also did not register his firm’s ICO with the US Securities and Exchange Commission as required by law, the DOJ said.
In an ICO, a cryptocurrency company sells digital tokens or “coins” to raise money.
The guilty plea comes after the SEC in 2018 obtained an emergency order halting Titanium Blockchain’s ICO. The court at the time also approved an emergency freeze on assets and the appointment of a receiver to hold the company’s assets. The SEC alleged that Mr. Stollery lied about business dealings with the Federal Reserve and with many well-known companies such as PayPal Holdings Inc. and Verizon Communications Inc.
Andrew Holmes, a lawyer representing Mr. Stollery, said the plea was the criminal follow-up to the SEC action. Mr. Holmes said in a call that Mr. Stollery intended to run Titanium Blockchain as a legitimate business, but “it was hubris that went beyond what he should have done.”
Mr. Holmes said that most of the funds that were converted to crypto are in the possession of the recipient and that Mr. Stollery has cooperated with the authorities from the beginning of the case.
“He is very remorseful and he wants to get as much money as possible back to those who put their money in,” Holmes said.
Mr. Stollery is currently out of custody on a signature bond, according to Mr. Holmes, and is scheduled to be sentenced Nov. 18. He faces up to 20 years in prison, the Justice Department said.
Write to Mengqi Sun at [email protected]
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