Titanium Blockchain CEO Convicted in Cryptocurrency Scheme –
Business owner faces criminal charges for his alleged involvement in a cryptocurrency scam.
Michael Alan Stollery, founder and CEO of Titanium Blockchain Infrastructure Services (TBIS), pleaded guilty in July 2022 to a single count of securities fraud against the United States government. The charge relates to an ongoing cryptocurrency scheme in which Mr. Stollery intentionally falsified documents, misled investors and failed to register his initial coin offering (ICO) with the appropriate authorities. Stollery was eventually sentenced late last month to a total of 51 months in prison.
This is one of several different cryptocurrency scams that have been exposed over the past three years. According to the FBI, people lost more than $10 billion to online fraud in 2022. Even massively successful trading platforms like FTX have collapsed and been exposed for their fraudulent practices. And the founder of FTX, Sam Bankman-Fried, also faces criminal charges such as securities fraud and money laundering.
The scale of the TBIS fraud scheme was not as large as FTX, but Stollery was still able to defraud a significant amount, $21 million, from domestic and international investors. Stollery used a combination of misleading claims, fictitious testimonials and falsified white papers to lure investors. These investors would then buy the unregistered ICO coin, “BARs.”
Many of the deceptive tactics used by Stollery are also used by dozens of other ongoing cryptocurrency scams. For example, he would use convoluted and overly technical jargon to explain how the TBIS cryptocurrency was different from similar scams. The information in his white papers incorrectly explained the technology behind the coin and the overall purpose of the offering. He also lied about the potential profitability of the coin.
The SEC complaint alleged that Stollery operated a “create and inflate” scheme. The scheme created two lines of illegal profit for the Stollery. First, he profited from investments originally made on false statements. Second, he continued to make money by making more false claims and selling the BAR token at an inflated price. Some of the key elements of the fraud, as outlined by the SEC, included:
– Targeting new and small businesses
– A deliberately misleading presence on social media that highlighted non-existent business relationships
– Creates a false sense of urgency
– Using deceptive incentives to create demand
– Publication of false certificates
– Inflating the value of BAR after the ICO ended
TBIS raised money from November 2017 to around February 2018. During this time, TBIS was able to illegally obtain $21 million in cash and cryptocurrency. Stollery then made these investments with his personal funds instead of putting the assets toward the growth of TBIS. The SEC alleges that Stollery used some of those funds to pay for his Hawaii condominium and to cover existing credit card bills.
TBIS claimed that a “malicious threat” stole 16 million BAR tokens in 2018. This action devalued the BAR token and TBIS responded by creating a replacement token called TBAR. TBIS then made the bogus statement, “We are pleased to announce that TBAR will soon be listed on a well-known stock exchange.” And later he declared, “TBAR listed on HITBTC!” Stollery faced a maximum of 20 years in prison for this elaborate scheme, but will serve only 4 years and 3 months.
Sources:
CEO of Titanium Blockchain Convicted for $21M Cryptocurrency Fraud Scheme
Titanium Blockchain boss pleads guilty to fraud
FTX Scams Explained: Everything You Need to Know
FBI Says $10 Billion Lost to Cyber Scams in 2022 as Crypto Investment Scams Rise
Securities and Exchange Commission (SEC) complaint
