SEC Halts Allegedly Fraudulent ICO From Titanium Blockchain
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30 May

The United States Securities and Exchange Commission (SEC) obtained a court order to freeze the assets of Titanium Blockchain Infrastructure Services. The company is accused of defrauding investors and violating federal securities laws, according to the regulator’s press release.

Why it is important

  1. The SEC is currently cracking down on fraudulent ICOs, but is at the same time leaning toward a "balanced approach."
  2. Experts from The Wall Street Journal recently warned that 19% of all ICOs may be a scam. Their conclusions were based on a study of 1450 token offerings, 271 of which aroused suspicion.

According to the SEC, Titanium Blockchain Infrastructure Services raised $21 million from investors from the U.S. and other countries during the ICO. The president of the startup, Michael Stollaire, is accused of spreading false information: he repeatedly publicly announced the project's connections with the U.S. Federal Reserve System and dozens of well-known companies (including Boeing, Verizon, PayPal, The Walt Disney Company etc.), all of which turned out to be fabricated. The project’s website also contained false reviews of supposedly corporate clients.

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

The complaint against Titanium Blockchain Infrastructure Services Inc. was filed with a federal district court in Los Angeles on 22 May. The regulator accused Stollaire and Titanium of violating several provisions of the antifraud and registration provisions of federal securities laws. The SEC is looking to return money to the investors, in addition to recovering fines and damages from the defendants. Stollaire will likely be banned from participating in digital securities offerings in the future. Earlier, the SEC launched a mock ICO website to inform the public of the risks associated with cryptocurrency investment.

By Nadya Astam

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