The founder and Chief Executive of Titanium Blockchain Infrastructure Services (TBIS) received a prion sentencing of four years and three months for defrauding initial coin offering (ICO) investors of $21 million.
The sentencing came after Titanium Blickchain’s CEO, Michael Alan Stollery, pled guilty to one count of securities fraud last year. The maximum sentencing for that charge is up to 20 years, but Stollery only received a third of it.
The US Securities and Exchange Commission (SEC) acted on Titanium ICO before criminal charges were brought against Stollery. The regulator stopped the ICO in May 2018 after it defrauded ICO investors in the US and abroad. The fraudulent project raised $21 million in merely three months, from December 2017 until March 2018, when the ICO market peaked.
Another Fraudulent ICO
Titanium Blockchain offered cryptocurrency investment opportunities through its native token, BAR. However, Stollery promoted the ICO to investors with a series of false and misleading statements. Through its white paper ad social media promotions, the fraudulent project was touted to have relationships with the Federal Reserve and dozens of prominent companies, including PayPal, Boeing, and Walt Disney.
In the guilty plea, the 54-year-old CEO admitted to falsifying the promotional documents to lure investors.
The extension of the fraudulent ICO went further as Stollery did not invest the collected funds in any blockchain development. Instead, he misappropriated the ICO funds comingling with his personal funds, using a portion of it for personal expenses, including purchasing a condominium in Hawaii.
The authorities further categorized the BAR token as unregistered security and blamed Stollery for failing to register with the SEC or receive an exemption from registration requirements.
A Failed Exit Strategy
The actions of the securities regulator against Titanium Blockchain came after the project announced the theft of a massive amount of tokens from its wallets. The revelation in February pushed the BAR token prices down by 95 percent, forcing cryptocurrency exchanges to halt trading it.
US law enforcement has criminally persecuted the mastermind of several cryptocurrency frauds. Earlier this month, Chet Stojanovich received a three-year jail sentence for scamming more than a dozen cryptocurrency mining equipment buyers of over $2 million. He was also ordered to forfeit more than $2.15 million and provide restitution of over $2.1…
