Titanium Blockchain Founder Jailed For Fraudulent $21M ICO

U.S. Department of Justice (DOJ) has sentenced Michael Stollery, CEO of Titanium Blockchain, to four years in prison, terminating the 2018 initial coin offering (ICO) debacle that defrauded investors of $21 million.

Stollery, the founder of Titanium Blockchain Infrastructure Services (TBIS), played a significant role in a fraudulent crypto scheme that unfolded between late 2017 and early 2018.

The Department of Justice reports that the scheme involved an ICO for TBIS. Investors bought a crypto token called BARs, and roughly $21 million was collected from the United States and other countries.

In 2018, the United States Securities and Exchange Commission (SEC) complained to Stollery, accusing him of failing to register the ICO with the regulatory body, among other charges. By July 2022, he pled guilty to one count of securities fraud for participating in the deceitful plan.

Furthermore, Stollery admitted to fabricating elements of TBIS whitepapers, inserting phony client testimonials on the company website, and falsely alleging business ties with the United States Federal Reserve and the fraudulent scheme misled investors about TBIS authenticity.

Additionally, according to the SEC, Stollery admitted to mingling ICO investors’ funds with his finances and using a portion to cover unrelated expenses, such as credit card bills and his Hawaii condominium. Initially facing up to 20 years in prison, Stollery will serve 4 years and 3 months for his role instead.

SEC Ramping Up Actions Against Crypto Space

The SEC has ramped up its actions against crypto violations in recent years. In 2022, the number of crypto-related lawsuits filed by the SEC rose, according to Cornerstone Research.

Our latest report, SEC Cryptocurrency Enforcement – 2022 Update, was published today. The report analyzes information from Cornerstone Research’s Cryptocurrency Enforcement Database. https://t.co/Sa5g2rga5q

— Cornerstone Research (@Cornerstone_Res) January 18, 2023

The SEC took 30 enforcement actions against digital asset market participants, a 50% increase from the 20 actions in 2021. Furthermore, out of the 30 enforcement actions in 2022, 14 were related to initial coin offerings (ICOs), with over half involving fraud allegations. Following this, Abe Chernin, Vice President of Cornerstone Research and co-head of its FinTech practice stated,

“Based on its implementation of the U.S. Supreme Court’s Howey test, the SEC continues to pursue actions alleging that tokens issued in ICO-related unregistered securities offerings were investment contracts subject to SEC regulation and enforcement.”

Chernin also noted an uptick in cooperation between the SEC and outside agencies and organizations during crypto-related investigations under the Gensler administration.

Related Reading | G7 Leaders Collaborate To Implement Stricter Crypto Regulations Globally

As the crypto market gains favor, more people are exposed to the danger of falling victim to these shady schemes. Furthermore, the SEC has started various investigations into ICO scams, leading to several notable cases, such as the case of Stollery.