CEO of Titanium Blockchain Admits Guilt in $21 Million Fraud Scheme

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The founder and chief executive of Titanium Blockchain could face up to 20 years in prison after pleading guilty to one count of securities fraud. 

The U.S. Justice Department announced 54-year-old Michael Alan Stollery of Redding, California admitted to participating in a scheme involving the cryptocurrency platform's initial coin offering (ICO), which collected roughly $21 million from investors.

Titanium Used Big Promises to Entice Investors

According to federal attorneys, Stollery promoted the business as a cryptocurrency investment opportunity, luring investors to buy "BARs," the platform's native token through a series of false and misleading statements. In court, Stollery admitted to fabricating portions of the company's white papers in order to attract investors when he pleaded guilty last week in the U.S. District Court for the Central District of California.

As stated in the documents, investors and potential investors may learn more about the cryptocurrency investment opportunity, including its goals and underlying technology, how it differed from existing crypto offers, and the likelihood that it will be profitable. However, Stollery admitted in court that his whitepaper and pitch to investors was fabricated, with the goal of bringing in more money on the ICO. 

"Stollery admitted that, to entice investors, he falsified aspects of TBIS’s white papers, which purportedly offered investors and prospective investors an explanation of the cryptocurrency investment offering," the Justice Department said in a press release. "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."

The company's white paper stated that it "intends to disrupt the present industry leaders in the provisioning and virtualization field." ROI will be realized much more quickly than with conventional cloud-based solutions.The business asserted that "Titanium will usher in a new era of network construction, much as steel transformed the building industry forever."

In order to give the impression of authenticity, Stollery allegedly put bogus client testimonials on TBIS's website and made false claims that he had business ties to the Federal Reserve and numerous other well-known organizations. 

Finally, Stollery admitted that the money raised in the ICO did not use the money as promised to the investors. Instead, part of the cash raised from the ICO went into his personal account, which was used for credit card payments and bills on his condo in Hawaii.

The former Titanium Blockchain site now redirects to a legal notice, informing former investors of their rights and process for filing a claim in the civil case against Stollery's company. 

The former CEO will learn his fate when he returns to court on November 18, 2022. The judge in the case will hand down a sentence " after considering the U.S. Sentencing Guidelines and other statutory factors."

Stollery's case is another example of federal officials cracking down on the cryptocurrency space after the collapse of TerraForm Labs' coins, triggering the "Crypto Winter." In June 2022, the U.S. Securities and Exchange Commission sued Coinbase over allegations the centralized exchange was selling unregulated securities. 

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