The US Securities and Exchange Commission has obtained a court order stopping the activities of Titanium Blockchain Infrastructure Services (TBIS), a blockchain startup whose ICO had raised $21 million from both local and international investors. Announcing the news in a press release, the SEC also revealed that the court had approved an emergency freezing of the company’s assets as well as the appointment of a receiver for the company. The SEC alleges that TBIS is involved in fraudulent activities that include deceiving investors about the company’s relationships with many big firms such as Boeing and The Walt Disney Company.
‘Like Investing In Intel Or Google’
The SEC accused the company’s CEO, Michael Alan Stollery, of lying to investors about the company’s association with major firms in order to attract more investment. Stollery, whom the press release describes as a self-proclaimed blockchain evangelist, allegedly lied about Titanium’s relationship with the Federal Reserve and many other top firms including Boeing, PayPal, Disney, and Verizon.
The SEC further alleged that Titanium had fabricated testimonials from its corporate clients. Stollery is also accused of having promoted the fraudulent ICO in YouTube videos and on social media platforms, equating investing in Titanium to investing in Intel or Google. As reported by Forbes, various corporates sent letters to Stollery demanding that he quit claiming the connections, but no action was taken. Furthermore, Titanium claimed to have lost 16 million BAR tokens. BAR was the native digital asset of the Titanium platform until May 4, 2018, when it announced BAR’s successor, TBAR. TBAR is currently trading at $0.042, having shed more than 60% of its value since the SEC announcement. Titanium had published the logos of 24 well-known companies on its website which it claimed to have been working with, but none of the partnerships were real.
The head of the SEC’s Cyber Unit, Robert Cohen, claimed the entire ICO was based on social media hype which was meant to deceive investors. He also warned investors who are quick to invest their money in ICOs to practice extreme caution when considering which projects to invest in. The SEC also called on any investors who had invested in the Titanium ICO and believe they are victims of fraud to contact them for assistance.
Happy To Cooperate
Stollery, who also goes by the nickname Stollaire, is accused of violating anti-fraud and registrations laws. The SEC also accuses EHI Network and Systems Management Inc., yet another Stollaire-owned company, of violating anti-fraud laws. In its complaint filed with a Los Angeles court, the SEC seeks to have Stollaire barred from participating in the issuance of digital assets in the future. The regulator is also seeking permanent injunctions against the two companies as well as the immediate return of all the ill-gotten gains.
Titanium consented to the appointment of a permanent receiver following the issuance of a temporary restraining order by the court. In a blog post, Titanium stated that it had cooperated fully with the SEC and was happy to continue cooperating under the terms of the order. The appointed receiver had already begun identifying the company’s assets, the company revealed, while assuring its token holders that all the involved parties would strive to arrive at the best possible outcome. The company also cautioned its community against paying attention to its Telegram channel, which it says “is no longer managed.” Information posted there may be disseminated by malicious individuals who are impersonating Titanium employees and may contain false statements, the company warned. Titanium remains unfazed by the setback, assuring its community that product development will continue quietly in the background.