Titanium Blockchain CEO Jailed for $21M Crypto Fraud Scheme

The CEO of a blockchain platform has been sentenced to four years and three months in prison for his role in a multi-million dollar cryptocurrency fraud scheme, according to a statement from the United States Department of Justice (DOJ).

$21M Crypto Fraud Scheme

Michael Alan Stollery, 54, was the CEO and founder of Blockchain Infrastructure Services Inc. (TBIS), a purported cryptocurrency investment platform that raised roughly $21 million from investors in the United States and overseas for the “BARs,” the cryptocurrency token or coin offered by TBIS’s initial coin offering (ICO), using false and misleading statements.

According to the DOJ, Stollery did not register the ICO with the United States Securities and Exchange Commission (SEC), nor did he have a valid exemption from the Commission’s registration requirements.

The convict also falsified documents to hype up the legitimacy of his company, according to the DOJ. This includes falsifying TBIS’s white papers, which were supposed to give investors and prospective investors a description of the cryptocurrency investment offering, including the “purpose and technology behind the offering,” how it was different from other cryptocurrency opportunities, and the “prospects for the offering’s profitability.”

Stollery also made fake client testimonials on TBIS’s website. He claimed to have connections with the Federal Reserve and several other prominent companies to “create the false appearance of legitimacy,” according to the DOJ.

Non-Business-Related Expenses

The DOJ stated that he did not use the invested money for its intended purpose. Instead, he commingled the ICO investors’ funds with his personal funds and used part of the offering proceeds for expenses such as credit card payments, and the payment of bills for his Hawaii condominium.

The 54-year-old pleaded guilty to one count of securities fraud in July and admitted to the DOJ claims such as using some of the invested money for personal purposes.

Meanwhile, the latest development comes at a time when Americans are increasingly losing their money to cryptocurrency investment schemes. According to a recent report by The Federal Bureau of Investigation (FBI), criminals stole a whopping $2.5 billion from U.S. citizens through these schemes last year.