CEO of Titanium Blockchain Pleads Guilty to $21 Million Cryptocurrency Fraud Scheme | OPA
The CEO of Titanium Blockchain Infrastructure Services Inc. (TBIS) pleaded guilty Friday to his role in a cryptocurrency fraud scheme involving TBIS’s initial coin offering (ICO) that raised approximately $21 million from investors in the United States and overseas.
According to court documents, Michael Alan Stollery, 54, of Reseda, California, the CEO and founder of TBIS, a purported cryptocurrency investment platform, touted TBIS as a cryptocurrency investment opportunity and enticed investors to buy “BARs,” the cryptocurrency token. or coin offered by TBIS’s ICO, through a series of false and misleading statements. Although required to do so, Stollery did not register the ICO regarding TBIS’ cryptocurrency investment offering with the US Securities and Exchange Commission (SEC), nor did he have a valid exemption from the SEC’s registration requirements.
Stollery admitted that, in order to lure investors, he falsified aspects of TBIS’ white papers, which allegedly provided investors and potential investors with an explanation of the cryptocurrency investment offering, including the purpose and technology behind the offering, how the offering differed from other cryptocurrency opportunities, and the prospects for the offering’s profitability. 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 paying bills for Stollery’s Hawaii condominium.
Stollery pleaded guilty to one count of securities fraud. He is scheduled to be sentenced on November 18 and faces up to 20 years in prison. A federal district judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Assistant Attorney General Kenneth A. Polite, Jr. from the Department of Justice’s Criminal Division; Assistant Director Luis Quesada of the FBI’s Criminal Investigation Division; and Acting Special Agent Cory Nootnagel of the Office of Inspector General for the Board of the Federal Reserve System and Bureau of Consumer Financial Protection, Western Region, made the announcement.
The FBI’s Los Angeles field office and the Federal Reserve Board’s OIG Western Region San Francisco office are investigating the case.
Fraud section attorneys Kevin Lowell, Tian Huang and Andrew Tyler are prosecuting the case.
