SEC Shuts Down "Fraudulent" ICO

The SEC secured a court order freezing the assets of Titanium Blockchain Infrastructure Services Inc. ("TBIS") and halting the operations of an allegedly fraudulent initial coin offering.

In a Complaint filed in the U.S. District Court for the Central District of California, the SEC claimed that TBIS founder and president Michael Stollery (a/k/a Michael Stollaire) raised over $21 million in cryptocurrency and cash investments through the offering of "BAR," a digital asset. The Complaint alleged that Stollaire marketed BAR as an investment (comparing it to an early-days Google stock) and emphasized that holders would share in TBIS earnings and future appreciation on BAR value. The SEC alleged that Mr. Stollaire made various misrepresentations about business relationships with several prominent companies, as well as the Federal Reserve Bank, in order to entice investors and hype BAR.

In addition, Mr. Stollaire allegedly misrepresented the types of products and services that his companies would provide, fabricated client testimonials and used company funds for personal expenses. The SEC further contended that the BAR token had no functionality despite being marketed as a "utility token." Mr. Stollaire claimed that the investor funds would be used to help develop his company as a blockchain-driven information technology service provider.

Mr. Stollaire also allegedly represented that a substantial theft of BAR tokens occurred and, in response, issued through his companies a replacement asset known as "TBAR." According to the SEC, Mr. Stollaire and his companies then proceeded to focus on inflating the value of TBAR, again by making various misrepresentations concerning business relationships and products and services. The SEC said that neither BAR nor TBAR was distributed through registered securities offerings.

The SEC charged Mr. Stollaire and his companies with violations of federal securities laws and with publicly offering unregistered securities.