The CEO of Titanium Blockchain Infrastructure Services Incorporated pleaded guilty Friday for his role in a cryptocurrency fraud scheme involving the company’s initial coin offering that raised approximately $21 million from investors in the United States and overseas, federal prosecutors said Monday.
According to court documents, Michael Alan Stollery, 54, of Reseda, California, was the CEO and founder of Titanium Blockchain Infrastructure Services, a purported cryptocurrency investment platform, and touted TBIS as a cryptocurrency investment opportunity, luring investors to purchase “BARs,” the cryptocurrency token or coin offered by the company’s initial coin offering, through a series of false and misleading statements. Although he was required to do so, Stollery did not register the initial coin offering regarding the company’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.
Stollery admitted that to entice investors, he falsified aspects of the company’s white papers, which purportedly offered investors and prospective investors an explanation of the cryptocurrency investment offering, including the purpose and technology behind the offering, how the offering was different from other cryptocurrency opportunities, and the prospects for the offering’s profitability. Stollery also planted fake client testimonials on the company’s website and falsely claimed that he had business relationships with the Federal Reserve and dozens of prominent companies to create a false appearance 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 the company, such as credit card payments and the payment of 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 court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The FBI’s Los Angeles Field Office and the Federal Reserve Board’s Federal Reserve Board’s OIG Western Region San Francisco Office are investigating the case.
