TBIS CEO Michael Alan Stollery pleaded guilty to participating in an ICO fraud scheme that raised about $21 million. as reported by the U.S. Department of Justice.
According to court documents, the California resident founded TBIS and marketed the platform as “an opportunity to invest in cryptocurrencies.” Stollery enticed investors to purchase the BAR token offered through the ICO via “a string of false and misleading statements.”
He also did not register the token offering with the SEC as required.
Stollery admitted that he falsified aspects of TBIS’s white paper, including the token’s purpose and the mechanics of the token offering, differences from other tokens, and profitability prospects.
He posted fake customer testimonials on the site and claimed to have business relationships with the Fed and dozens of well-known companies to lend the project legitimacy.
“The founder of TBIS did not use the raised assets as promised; instead, he commingled the ICO investors’ funds with his own. At least a portion of the amount was directed to personal expenses such as credit card payments or Hawaii condo fees,” the press release states.
The SEC filed charges in May 2018, accusing Stollery and his company of violating anti-fraud provisions and federal securities laws.
The entrepreneur agreed to a single count of securities fraud. Sentencing is scheduled for November 18; Stollery faces up to 20 years in prison.
In May, SEC Chair Gary Gensler said that most cryptocurrencies fall under the agency’s jurisdiction. The head of the agency announced tighter oversight of the industry and enhanced investor protection.
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