ceo Pleads guilty to cryptocurrency fraud charges

The CEO of Titanium Blockchain Infrastructure Services (TBIS) has pleaded guilty to charges of securities fraud after using ‘false and misleading statements’ to convince investors to buy unregistered cryptocurrency tokens.

Titanium Blockchain CEO Pleads Guilty to Cryptocurrency Fraud Charges

Michael Alan Stollery, 54, of Reseda, California, admitted his role in a cryptocurrency fraud scheme involving TBIS’s initial coin offering (ICO) that raised around $21 million from investors both in the United States and from abroad. His TBIS firm were presented to investors as a cryptocurrency investment platform who were lured into purchasing ‘BARs’ which were supposedly legitimate cryptocurrency tokens but which Stollery had not registered with the U.S. Securities and Exchange Commission (SEC).

Investors Hoodwinked by Crypto Fraud

Stollery has since explained that in order to entice investors, he falsified aspects of TBIS’s white papers. The falsifications purportedly offered investors and prospective investors an explanation of the cryptocurrency investment offering, which included the purpose and technology behind the offering as well as how the offering was different from other cryptocurrency opportunities. He also falsified the prospects for the offering’s profitability.

Announcing the charges and plea in court were Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. Also present were Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division and Acting Special Agent in Charge, Cory Nootnagel, of the Office of Inspector General for the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection, Western Region.

Crypto Criminal Used Funds for Hawai’i Condo

A statement on the Department of Justice website further explained: “Stollery also planted fake client testimonials on TBIS’s website and falsely claimed that he had business relationships with the Federal Reserve and dozens of prominent companies to create the 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 TBIS, such as credit card payments and the payment of bills for Stollery’s Hawaii condominium.”

Stollery’s guilty plea comes four years after the SEC first obtained an emergency order to halt TBIS’s ICO in 2018. An emergency asset freeze was also approved, and a receiver to hold the firm’s assets was also appointed.

One of the lawyers representing Stollery, Andrew Holmes, explained that the plea was the criminal follow-up to the SEC action. Holmes spoke to the Wall Street Journal, saying that Stollery’s crimes were: “Overexuberance that went beyond what he should’ve done.”

Holmes also explained that most of the investors’ funds that were converted to cryptocurrency are in the possession of the receiver and that Stollery has been cooperating with the authorities from the beginning of the case. “He’s very remorseful,” added Holmes. “He wants to get as much money as possible back to those that put their money in.”

Fraudster Faces Up To 20 years

Stollery is scheduled to be sentenced on November 18 and could face up to 20 years in prison. A federal district court judge will determine any sentence and will take the U.S. Sentencing Guidelines and other statutory factors into consideration.

Image: Depositphotos

This article, “Titanium Blockchain CEO Pleads Guilty to Cryptocurrency Fraud Charges” was first published on Small Business Trends

Source: Small Business Trends

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