The project claimed to have partnered with the Federal Reserve and dozens of established companies. He is now facing up to 20 years of imprisonment.
The US Department of Justice announced on Monday that Michael Alan Stollery, the CEO and Founder of the $21 million initial coin offering (ICO) scam of Titanium Blockchain Infrastructure Services pled guilty to his crime.
He pled guilty to one count of securities fraud and is now facing jail time of up to 20 years. His sentencing has been scheduled for November 18 at a federal district court.
The Titanium ICO defrauded investors in both the United States and overseas until the SEC stopped the offering with a court order in May 2018.
The 54-year-old admitted that he touted the cryptocurrency project to be an investment opportunity to lure investors through false and misleading statements. The authority highlighted that Titanium ICO neither had any authorization from the Securities and Exchange Commission (SEC) nor had any exemption to offer such investments, thus violating the country’s securities law.
Stollery further admitted that he falsified the aspects of Titanium ICO’s whitepaper. He even added fake client testimonials on Titanium’s website. The project even claimed that it had inked deals with big names like PayPal, Boeing and Walt Disney.
But that was not all. Stollery even falsely claimed that he had a business relationship with the Federal Reserve.
Moreover, his guilty plea includes admission to the misappropriation of customer funds. He spent a portion of the ICO proceeds on credit card payments and even paying bills for his Hawaii condominium.
The ICO Bust
The ICO market peaked in 2017 but now has almost vanished. Fraudsters used the market hype to lure investors toward scams. The SEC has busted dozens of fake ICO and cryptocurrency projects. Many were outright scams, while several violated US securities law.
Meanwhile, the SEC is engaged in a legal battle with the blockchain company, Ripple. The regulator alleged that the blockchain-based payments firm raised $1.2 billion with its XRP token, which falls under the category of securities.