The Securities and Exchange Commission (SEC) has obtained a court order halting an ongoing fraud involving an initial coin offering (ICO) that raised as much as $21 million from investors in and outside the US. The court also approved an emergency asset freeze and the appointment of a receiver for Titanium Blockchain Infrastructure Services, the firm behind the alleged scheme.
The SEC complaint charges that Titanium President Michael Alan Stollery, also known as Michael Stollaire, a self-described “blockchain evangelist,” lied about business relationships with the Federal Reserve and dozens of well-known firms, including PayPal, Verizon, Boeing, and The Walt Disney Company. The complaint has been filed in the federal district court in Los Angeles, charging Stollaire and Titanium with violating the antifraud and registration provisions of the federal securities laws. Another Stollaire company, EHI Internetwork and Systems Management Inc, is also charged with violating the antifraud provisions. The complaint alleges that Titanium’s website contained fabricated testimonials from corporate customers and that Stollaire publicly, and fraudulently, claimed to have relationships with numerous corporate clients. The complaint alleges that Stollaire promoted the ICO through videos and social media and compared it to investing in “Intel or Google.”
The complaint seeks preliminary and permanent injunctions, the return of allegedly ill-gotten gains plus interest and penalties, and a bar against Stollaire to prohibit him from participating in offering digital securities in the future. Robert A. Cohen, Chief of the SEC Enforcement Division’s Cyber Unit, says ‘this ICO was based on a social media marketing blitz that allegedly deceived investors with purely fictional claims of business prospects. said. The SEC has again warned investors to be especially cautious when considering ICO investments. The SEC’s investigation is continuing.