The U.S. Securities and Exchange Commission (SEC) has gone after a self-described “blockchain evangelist” who it said fabricated connections with companies like PayPal and Disney to promote his company’s initial coin offering (ICO).
Michael Alan Stollery, also known as Michael Stollaire, faces charges of securities fraud after the SEC discovered an ongoing fraud involving his Titanium Blockchain Infrastructure Services Inc.’s ICO, which federal authorities said raised as much as $21 million from investors in and outside the United States.
On Tuesday, the SEC announced it has obtained a court order halting Titanium’s operations as well as an emergency asset freeze and the appointment of a receiver for the company.
SEC investigators said in a bid to promote Titanium’s token sale, Stollery lied about his business connections with the U.S. Federal Reserve and companies like PayPal, Verizon, Boeing, and the Walt Disney Company. On its website, Titanium boasted testimonials from corporate customers and from Stollaire, who claimed to have relationships with a number of corporate clients. Stollaire also reportedly promoted the ICO on social media, comparing it to investing in internet giants like Intel and Google.”
Robert Cohen, chief of the SEC Enforcement Division’s Cyber Unit, said the Titanium ICO “was based on a social media marketing blitz that allegedly deceived investors with purely fictional claims of business prospects,” urging investors “to be especially cautious when considering these as investments.”
SEC’s complaint charges Stollaire and Titanium with violating the antifraud and registration provisions of the federal securities laws. Stollaire’s other company, EHI Internetwork and Systems Management Inc., has also been charged with violating the antifraud provisions. The securities regulator seeks preliminary and permanent injunctions, return of allegedly ill-gotten gains plus interest and penalties, and a bar against Stollaire to prohibit him from participating in offering digital securities in the future.
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