The Titanium Blockchain executive has been finally sentenced after pleading guilty in July last year.
The California head of the Titanium Blockchain was sentenced to four years in prison, ending the initial coin offering of 2018 (ICO) that robbed investors of $21 million.
Michael Stollery, the founder of Titanium Blockchain Infrastructure Services (TBIS), was a key player in a “cryptocurrency fraud scheme” that included the first funding for TBIS that was made between late 2017 and early 2018, according to the news. Investors bought a crypto token called BAR to participate in the ICO. About $21 million was raised in the United States and abroad, according to the Department of Justice. However, in a 2018 US Securities and Exchange Commission complaint, Stollery was accused of not registering the ICO with the regulator, among other allegations.
In July 2022, he pleaded guilty to one count of securities fraud for his role in the “fraud scheme”.
He admitted to falsifying parts of the TBIS white paper and posting false customer testimonials on the TBIS website, as well as making false claims in business dealings with the United States Federal Reserve, which led to misleading investors about the integrity and Expected benefits of TBIS. He also admitted to mixing money from ICO investors with his own, using some to pay for unrelated expenses such as credit card bills and payments for his condominium in Hawaii, according to the SEC.
Although he was sentenced to up to 20 years in prison, he will instead serve a total of four years and three months in prison for his involvement. The SEC has stepped up its actions against the cryptocurrency space in recent years.
According to Cornerstone Research, the number of cryptocurrency lawsuits filed by the SEC has increased in 2022, with 30 enforcement actions against the digital asset market during the year, up 50% from 20 shares in 2021. Out of a total of 30 enforcement actions in 2022, 14 involved initial coin offerings (ICOs), more than half of which involved fraud allegations.
“Based on its implementation of the US Supreme Court’s Howey Test, the SEC continues to pursue the alleged actions that the tokens issued in the ICO related to unregistered securities offerings are financial contracts under SEC regulations and enforcement,” said Abe Chernin, vice president of Cornerstone Research and the head of its FinTech practice. “We have seen an increase in assistance to the SEC from other companies and organizations with crypto-related investigations under the Gensler administration,” he added.
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