The US Securities and Exchange Commission (SEC) has obtained a court order to stop the activities of an initial coin offering (ICO) called Titanium Blockchain Infrastructure Services Inc. that raised $21 million, allegedly by fraudulent means.
According to a complaint filed by the SEC on May 29, the mastermind behind Titanium, “blockchain evangelist” Michael Alan Stollery, also known as Michael Stollaire, “lied about business relationships with the Federal Reserve and dozens of well-known firms, including PayPal, Verizon, Boeing, and the Walt Disney Company.”
The SEC 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.” Further, in promoting Titanium on social media, Stollaire compared investing in Titanium with “investing in Intel or Google.”
Stollaire’s “social media marketing blitz that allegedly deceived investors with purely fictional claims of business prospects” helped him raise “as much as $21 million from investors in and outside the U.S.”
Now the SEC is seeking “preliminary and permanent injunctions, the return of allegedly ill-gotten gains plus interest and penalties, and a bar against Stollaire prohibiting him from participating in offering digital securities in the future.”
Regulators in the US and Canada have increased their scrutiny of ICO projects conducted in 2018, stepping up investigative efforts to detect and halt fraudulent projects. A far-reaching operation aimed at fraudulent ICOs and crypto projects dubbed “Cryptosweep” was announced on May 21 by the North American Securities Administrators Association (NASAA).
The SEC has also launched a website for a mock ICO project called “HoweyCoin” that aims to educate investors about the telltale signs of a fraudulent ICO.