Titanium blockchain CEO pleads guilty in $21M digital assets securities fraud case

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Michael Alan Stollery, the CEO of Titanium Blockchain Infrastructure Services Inc. (TBIS), has pleaded guilty to committing securities fraud through an initial coin offering (ICO) the company conducted back in 2018 that raised about $21 million from investors both in and outside the United States.

In a press release, the Department of Justice (DOJ) highlighted court documents of the case. The 54-year-old Reseda, California resident used false claims to lure investors into buying BARs, the digital asset offered by his company TBIS. He also failed to register the securities offering with the U.S. securities regulator, authorities said.

“Although he was required to do so, Stollery did not register the ICO regarding TBIS’s cryptocurrency investment offering with the U.S. Securities and Exchange Commission (SEC), nor did he have a valid exemption from the SEC’s registration requirements,” the DOJ wrote.

Stollery has now admitted to falsifying aspects of Titanium blockchain’s white paper; telling investors that he had business relationships with the Federal Reserve and other prominent companies; planting fake customer testimonials on TBIS’ website, and misappropriating investors’ funds for his personal use, including credit card payments and the payment of bills for a Hawaii condominium.

The Justice Department intends to sentence him on November 18 after a federal judge considers the case. The self-described “Blockchain Evangelist” could face up to 20 years in prison if convicted.

The case was first opened in 2018 by the SEC. At the time, the regulator said the ICO “was based on a social media marketing blitz that allegedly deceived investors with purely fictional claims of business prospects.” The SEC also obtained a court order to halt Titanium’s operations and freeze its assets. 

DOJ ramping up its clamp down on digital assets fraud cases

The case is only the latest addition to the DOJ’s roster of actions in the digital assets space. Late last month, the Justice Department announced charges in six cases involving digital assets, including its second and largest NFT rug pull case and another ICO scam case. 

The regulator stated in the announcement that it is determined to use “every available tool to protect consumers and investors from fraud and manipulation.” One of these tools is its recently created special digital assets enforcement unit.

Bloomberg reports that this unit will collaborate with both local and international partners to crack down on digital assets crimes. Eun Young Choi, a veteran cybersecurity prosecutor, has been named to lead the new team.

Watch: The BSV Global Blockchain Convention panel, Law & Order: Regulatory Compliance for Blockchain & Digital Assets

https://www.youtube.com/watch?v=R58jiNcC5mA