Titanium Blockchain CEO pleads guilty to cryptocurrency fraud charges

The CEO of Titanium Blockchain Infrastructure Services (TBIS) has pleaded guilty to securities fraud charges after using “false and misleading statements” to convince investors to buy unregistered cryptocurrency tokens.

Titanium Blockchain CEO pleads guilty to cryptocurrency fraud charges

Michael Alan Stollery, 54, of Reseda, California, admitted his role in a cryptocurrency fraud scheme involving TBIS’ initial coin offering (ICO) that raised about $21 million from investors both in the United States and abroad. His TBIS company was pitched to investors as a cryptocurrency investment platform who were enticed to buy “BARs” that were supposedly legitimate cryptocurrency tokens, but which Stollery had not registered with the US Securities and Exchange Commission (SEC).

Investors duped by crypto scams

Stollery has since explained that to lure investors, he falsified aspects of TBIS’s white papers. The forgeries allegedly provided investors and potential investors with an explanation of the cryptocurrency investment offering, which included the purpose and technology behind the offering, as well as how the offering differed from other cryptocurrency opportunities. He also falsified the prospects for the offer’s profitability.

Attorney General Kenneth A. Polite, Jr. from the Justice Department’s criminal division, announced the charges and plea in court. Also present were Assistant Director Luis Quesada of the FBI’s Investigations Division and Acting Special Agent in Charge Cory Nootnagel of the Office of Inspector General for the Board of the Federal Reserve System and Bureau of Consumer Financial Protection, Western Region.

Crypto Criminal used funds for Hawaii Condo

A statement on the Justice Department website further explained: “Stollery also planted false customer testimonials on TBIS’s website and falsely claimed he had business relationships with the Federal Reserve and dozens of prominent companies to create a false impression of legitimacy.

“Stollery further admitted that he did not use the invested money as promised, but instead commingled the ICO investors’ funds with his personal funds, using at least a portion of the offering proceeds for expenses unrelated to TBIS, such as credit card payments and the payment of bills for the Stollery’s Hawaii condominium.”

Stollery’s guilty plea comes four years after the SEC first obtained an emergency order to stop TBIS’s ICO in 2018. An emergency freeze on assets was also approved, and a receiver to hold the firm’s assets was also appointed.

One of the attorneys representing Stollery, Andrew Holmes, explained that the plea was the criminal follow-up to the SEC action. Speaking to the Wall Street Journal, Holmes said Stollery’s crimes were: “A rashness that went beyond what he should have done.”

Holmes also explained that most of the investors’ funds that were converted to cryptocurrency are in the recipient’s possession and that Stollery has cooperated with the authorities from the beginning of the case. “He’s very remorseful,” Holmes added. “He wants to get as much money as possible back to those who put their money in.”

Fraudsters face up to 20 years

Stollery is scheduled to be sentenced on November 18 and could face up to 20 years in prison. A federal district court judge will determine any sentence and will take into account the US Sentencing Guidelines and other statutory factors.

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Image: Depositphotos