SEC Stops Fraudulent ICO That Raised $21M

The Securities and Exchange Commission (SEC) announced on Tuesday (May 29) that it has obtained a court order to stop a fraudulent initial coin offering (ICO) allegedly run by Titanium Blockchain Infrastructure Services Inc., which has raised as much as $21 million from investors in and outside the U.S.

In addition, the court approved an emergency asset freeze and the appointment of a receiver for Titanium.

The SEC complaint, which was unsealed on Tuesday (May 29), states that Titanium President Michael Alan Stollery (aka Michael Stollaire) lied about his business relationships with the Federal Reserve and dozens of prominent firms, including PayPal, Verizon, Boeing and The Walt Disney Company.

According to the SEC, Titanium’s website also featured fabricated testimonials from corporate customers, and Stollaire falsely claimed in public to have relationships with various corporate clients.

Stollaire, who called himself a “blockchain evangelist,” promoted the ICO through videos and social media, comparing it to investing in “Intel or Google.”

“This ICO was based on a social media marketing blitz that allegedly deceived investors with purely fictional claims of business prospects,” said Robert A. Cohen, chief of the SEC enforcement division’s cyber unit. “Having filed multiple cases involving allegedly fraudulent ICOs, we again encourage investors to be especially cautious when considering these as investments.”

The SEC’s complaint, filed on May 22 in federal district court in Los Angeles, charges Stollaire and Titanium with violating the antifraud and registration provisions of the federal securities laws. The complaint also charges another Stollaire company, EHI Internetwork and Systems Management Inc., with violating the antifraud provisions.

The complaint seeks preliminary and permanent injunctions, return of the funds received with interest and penalties, and a bar against Stollaire to prohibit him from participating in ICOs in the future.

Stollaire and his companies agreed to the entry of a preliminary injunction and the appointment of a permanent receiver over Titanium.