Titanium Blockchain CEO Pleads Guilty to $21 Million ICO Fraud

Michael Alan Stollery, CEO of blockchain company Titanium Blockchain Infrastructure Services (TBIS), has pleaded guilty to securities fraud over a $21 million cryptocurrency scam. The California man admitted to falsifying details surrounding the BAR coin, a crowdfunding token that should have – but wasn’t – registered with the US Securities and Exchange Commission.

The TBIS scam was one of many dubious initial coin offerings, or ICOs, in the late 1990s. According to the complaint, between 2017 and 2018, Stollery introduced TBIS as a new company and hyped its coin with a series of elaborate false claims. TBIS singled out non-existent links with companies such as Apple, Boeing and IBM. Some of the “partners” complained, and Stollery apparently replied, “I didn’t know that a procedure had to be followed, etc.” The company also offered a number of supposedly trademarked services for which it had not registered trademarks. (Perhaps more importantly, the services do not appear to have existed, and the business associated with TBIS was apparently an IT supplier and equipment retailer.)

The list of these non-trademarks includes painfully insane terms like “company as a service” – unfortunately also used outside the blockchain scam world – as well as exciting products like “Vordex”, supposedly a peer-to-peer crypto exchange:

TBIS whitepapers and other marketing materials included detailed descriptions of several products and services that would be available on the TBIS platform, as well as slogans that TBIS used: Company as a Service™, Bring Your Own Cloud™ (BYOC™), DEXchange™ , Mining as a Service™, Instant ICO Incubator™, Desktop as a Service™ (DaaS™), CryptoEscrow™, The Ultimate Strength of the Blockchain … Unleashed™, VORDEX™.

Like many blockchain projects, TBIS laid out its plans for the future in a white paper, promising that its BAR token would be useful for accessing a platform that offers real services. It recorded at least 75 people paying in cash and probably more paying with other cryptocurrencies, apparently taking in about $21 million. But at least $200,000 of the money went into Stollery’s bank account, $50,000 was used to pay off credit card bills, and some was used for non-TBIS payments such as the bills for Stollery’s condo in Hawaii.

On top of all this, TBIS claimed that there had been a major BAR hack and issued another coin, TBAR, to replace it. However, the original BAR coin continued to be traded on exchanges.

Titanium was one of several ICO projects to raise fraud allegations around 2017 and 2018 during a wave of coin-based fundraising, and the SEC even created its own fake page to warn buyers of scams. Today, much of the alleged fraud involves non-fungible token or NFT projects – but the legal system is still catching up with ICOs. Stollery is scheduled for sentencing in November, where the fraud charge carries a maximum prison sentence of 20 years.