Titanium Blockchain Infrastructure Services (TBIS) CEO Michael Alan Stolleri pleaded guilty to participating in a fraudulent ICO scheme that raised about $21 million, the U.S. Department of Justice reported.
The California resident founded TBIS and promoted the platform as a “cryptocurrency investment opportunity,” according to court documents. Stollery lured investors into buying the BAR token offered through the ICO through “a series of false and misleading claims.”
It also failed to register the coin offering as required by the US Securities and Exchange Commission (SEC).
Stollery admitted that he falsified aspects of the TBIS whitepaper, including the purpose and technology of coin offering, differences from other tokens, and profitability prospects.
He posted fake customer testimonials on the site and claimed to have business relationships with the Fed and dozens of high-profile companies to legitimize the project.
“The founder of TBIS did not use the raised assets as promised, instead he combined the funds of the ICO investors with his own. At least part of the amount he directed to his own expenses, such as credit card payments or paying bills for a condominium in Hawaii, ”the press release says.
The SEC filed a lawsuit regarding TBIS activities in May 2018. The regulator filed claims against Stollery and his company for violating anti-fraud and federal securities laws.
The entrepreneur agreed to one count of securities fraud. The verdict will be announced on November 18; Stolleri faces up to 20 years in prison.