Michael Alan Stollery, the CEO of blockchain company Titanium Blockchain Infrastructure Services (TBIS), has pleaded guilty to securities fraud over a $21 million cryptocurrency scam. The California man admitted to falsifying details around the BAR coin, a crowdfunding token that should have — but wasn’t — registered with the US Securities and Exchange Commission.
The TBIS scam was one of many dodgy initial coin offerings, or ICOs, in the late ‘10s. According to the complaint, between 2017 and 2018, Stollery introduced TBIS as a new company and hyped its coin with a string of elaborate false claims. TBIS touted nonexistent links with companies like Apple, Boeing, and IBM. Some of the “partners” complained, to which Stollery apparently replied, “I did not know that a procedure would need to have been followed, etc.” The company also offered a variety of supposedly trademarked services for which it had not registered trademarks. (Perhaps more importantly, the services appear to have not existed, and the business affiliated with TBIS was apparently an IT contractor and equipment reseller.)
The list of these non-trademarks includes painfully inane terms like “company as a service” — which sadly is also used outside of the world of blockchain scams — as well as exciting products like “Vordex,” supposedly a peer-to-peer crypto exchange:
The TBIS whitepapers and other marketing materials included detailed descriptions of several products and services that would be available on the TBIS platform, as well as slogans that TBIS used: Company as a Service™, Bring Your Own Cloud™ (BYOC™), DEXchange™, Mining as a Service™, Instant ICO Incubator™, Desktop as a Service™ (DaaS™), CryptoEscrow™, The Ultimate Strength of the Blockchain … Unleashed™, VORDEX™.
Like many blockchain projects, TBIS laid out its plans for the future in a white paper, promising its BAR token would be useful for accessing a platform offering real services. It signed up at least 75 people who paid in cash and likely more who paid with other cryptocurrencies, apparently taking in around $21 million. But at least $200,000 of that money went to Stollery’s bank account, $50,000 was used to pay off credit card bills, and some was used for non-TBIS payments like the bills for Stollery’s condo in Hawaii.
On top of all this, TBIS claimed there had been a major BAR hack and issued a second coin, TBAR, to replace it. The original BAR coin, however, continued to be traded on exchanges.
Titanium was one of multiple ICO projects that drew fraud charges around 2017 and 2018 during a surge of coin-based fundraising, and the SEC even created its own fake site to warn buyers about scams. Today, much of the alleged fraud involves non-fungible token, or NFT, projects — but the legal system is still catching up to ICOs. Stollery is scheduled for sentencing in November, where the fraud charge carries a maximum 20-year prison sentence.
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