Cryptocurrency CEO pleads guilty to defrauding investors
Investors purchased "BARs," TBIS's digital currency, after Stollery made a series of false statements to entice them
Titanium Blockchain Infrastructure Services CEO Michael Alan Stollery pleaded guilty to one count securities fraud on Monday, the Department of Justice announced.
Stollery raised roughly $21 million from investors as part of his cryptocurrency's initial coin offering (ICO), the DOJ said in a press release.
Investors purchased "BARs," TBIS's digital currency, after Stollery made a series of false statements to entice them, the release states. He also failed to register the ICO with the Securities and Exchange Commission.
Moreover, he "falsified aspects of TBIS’s white papers, which purportedly offered investors and prospective investors an explanation of the cryptocurrency investment offering, 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," per the DOJ.
To give the scheme apparent credibility, he also created false client testimonials on the company site and claimed to have "business relationships" with the Federal Reserve and private companies.
After raising the funds through ICO, Stollery went on to use the money for personal use, paying off debts and other expenses unrelated to TBIS. He faces up to 20 years in prison.
The fraud case comes as cryptocurrency worldwide has faced a significant slump in recent months and increased scrutiny over fraud and theft incidents.