Titanium Blockchain CEO behind BAR’s ICO scam, put behind bars for 4 years
The California-based CEO of Titanium Blockchain has been sentenced to four years in prison – ending a 2018 initial coin offering (ICO) saga that robbed investors of $21 million.
Michael Stollery, who founded Titanium Blockchain Infrastructure Services (TBIS), was a key figure in a “cryptocurrency fraud scheme” involving an initial coin offering for TBIS – carried out between late 2017 and early 2018, according to the Department of Justice.
Investors bought a crypto token called BARs to participate in the ICO. About $21 million was raised from the United States and abroad, according to the Justice Department.
However, in a complaint filed by the United States Securities and Exchange Commission (SEC) in 2018, Stollery was accused of failing to register its ICO with the regulator, among other charges.
In July 2022, he pleaded guilty to one count of securities fraud for his role in the “fraud scheme.”
He admitted to falsifying aspects of TBIS’s whitepapers and planting false customer testimonials on the TBIS website, along with false claims about business dealings with the United States Federal Reserve—all of which served to mislead investors about TBIS’s legitimacy and prospects for profit.
He also admitted to commingling ICO investors’ funds with his own, using some to pay for unrelated expenses such as credit card bills and bills for his Hawaii condominium, according to the SEC.
Although he risked up to 20 years in prison, he will instead serve a total of four years and three months in prison for his involvement.
Related: Euler Finance Exploit Returns Over 58,000 Stolen Ether
SEC steps up enforcement
The SEC has intensified actions against the cryptocurrency space in recent years.
According to Cornerstone Research, the number of cryptocurrency-related lawsuits filed by the SEC in 2022, with 30 enforcement actions against digital asset market participants in the year, grew 50% from the 20 actions in 2021.
Of the 30 total enforcement actions in 2022, 14 involved initial coin offerings (ICOs), with more than half of these involving a fraud allegation.
“Based on the implementation of the U.S. Supreme Court’s Howey test, the SEC continues to pursue actions alleging that tokens issued in ICO-related unregistered securities offerings were investment contracts subject to SEC regulation and enforcement,” said Abe Chernin, Vice President of Cornerstone Research and Co-Head of FinTech – the practice.
“We have observed an increase in assistance to the SEC from outside agencies and organizations during crypto-related investigations during the Gensler administration,” he added.
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