Michael Alan Stollery, the CEO and founder of Titanium Blockchain Infrastructure Services (TBIS), has been sentenced to four years and three months in prison for defrauding investors in an initial coin offering (ICO) of $21 million. Stollery pleaded guilty to one count of securities fraud, which carries a maximum sentence of 20 years, but received a third of that time.
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The U.S. Securities and Exchange Commission (SEC) intervened before criminal charges were brought against Stollery, halting the ICO in May 2018 after it defrauded investors in the U.S. and abroad. The project raised $21 million in just three months, from December 2017 until March 2018, during the peak of the ICO market.
Titanium Blockchain promoted its cryptocurrency investment opportunities through its native token, BAR, but Stollery advertised the ICO with a series of false and misleading statements. The fraudulent project was advertised to have relationships with the Federal Reserve and dozens of prominent companies, including PayPal, Boeing, and Walt Disney, through its white paper and social media promotions.
In his guilty plea, the 54-year-old CEO admitted to falsifying promotional documents to lure investors. Stollery further misappropriated the ICO funds, using them for personal expenses, including purchasing a condominium in Hawaii, instead of investing them in any blockchain development.
The BAR token was categorized by authorities as an unregistered security, and Stollery was blamed for failing to register with the SEC or receive an exemption from registration requirements. Titanium Blockchain’s woes were compounded when the project announced the theft of a massive amount of tokens from its wallets, which led to a 95% drop in BAR token prices and halted trading on cryptocurrency exchanges.
Stollery's sentencing is the latest in a string of criminal prosecutions by U.S. law enforcement against masterminds of cryptocurrency fraud. Chet Stojanovich was sentenced to three years in jail earlier this month for scamming more than a dozen cryptocurrency mining equipment buyers of over $2 million, while Eddy Alexandre pled guilty to soliciting over $248 million in investments from tens of thousands of investors through the fraudulent forex and cryptocurrency trading platform EminiFX. Alexandre faces a maximum prison sentence of 10 years and has agreed to forfeit around $249 million and pay restitution to the victims.
