Titanium Blockchain Infrastructure Scam Exposed
Titanium claims it is a company based on blockchain infrastructure that provides services for companies and individuals.
The Titanium Project provides new insights on how to build an internet business from scratch to fast, secure, effortless growth and on the same amount of money that would normally be paid. Imagine how much time you save with the fact that everything you need to start a business is offered by the Titanium platform. Typically, the company’s infrastructure exists on several devices that greatly complicate its application by occupying a lot of space and other costs associated with its improvement. Titanium will save all this time and cost, by being in decentralized blockade with more than 20,000 nodes, each potential node of several hundred hidden systems.
The Securities and Exchange Commission has announced it has obtained a court order halting an ongoing fraud involving an initial coin offering (ICO) that raised as much as $21 million from investors in and outside the U.S. The court also approved an emergency asset freeze and the appointment of a receiver for Titanium Blockchain Infrastructure Services Inc., the firm behind the scam.
Here are the details of the Titanium Blockchain Infrastructure Scam:
This matter involves an investment fraud involving up to $21 million in cash and digital assets under the guise of an initial coin offering (“ICO”) of a digital asset called “BAR” by Michael Alan Stollery aka Michael Stoller aka Michael Stollaire (“Stollaire”) through two companies that he controls: Titanium Blockchain Infrastructure Services, Inc. (“TBIS”) and EHI Internetwork and Systems Management, Inc. aka EHI-INSM, Inc. (“EHI”) (collectively with Stollaire, “Defendants”).
Defendants employed a “create and inflate” scheme that enabled them to illegally profit both at the outset of the scheme (when raising money from investors through fraudulent statements in the ICO) as well as later (when continuing to make unsubstantiated claims in hopes of selling their own digital asset, BAR, at inflated values). Defendants’ scheme entailed creating their digital asset for a newly conceived business; orchestrating a social media campaign based on false corporate relationships ~ and false testimonials to establish a presence and seeming expertise; generating demand for their digital asset by offering various incentives and creating urgency so investors would invest in the ICO; and, after conclusion of the ICO, inflating the value of the ~ digital asset, which was freely tradeable.
Between late November 2017 through at least January 25, 2018, the defendants succeeded in raising as much as $21 million in the form of various digital assets, such as Ether and Bitcoin, and cash from dozens of investors located in at least 18 states, including California, and abroad, who purchased BAR.
Throughout this scheme, Defendants made false and misleading claims all with the purpose of enticing investors and hyping BAR so that Defendants could profit. Defendants’ key misrepresentations included prominently identifying by name and logo nearly thirty large well-known companies (and the Federal Reserve) as purported customers, and would-be customers of TBIS’s information technology (“IT”) services. One of the first images that bombarded investors in defendants’ written offering materials depicted a full page chart with the following names and logos:
“The lure of the companies’ names and logos was such that Stollaire himself tweeted out this chart on November 6, 2017 (which remains on his Twitter feed to this day) and mentioned several of these companies by name in the many online interviews he gave about TBIS. TBIS’s website also listed names and logos of other companies as purported customers, and would-be customers of TBIS — Verizon, McDonald’s, Cisco, Pfizer, SAP, HP, and Acxiom.
The defendants did not have relationships with these companies (or the Federal Reserve) and had no basis to represent that any of them were customers of TBIS’s services, or even would-be customers of TBIS’s services.
Defendants also advertised in TBIS’s whitepaper and other marketing materials a bevy of trademarked products and services TBIS would purportedly provide; however, defendants had no actual trademarks.
While raising funds from investors on these false pretenses, Stollaire commingled some of the ICO investors’ funds with his personal funds, using at least a portion of the offering proceeds for expenses unrelated to TBIS, such as credit card payments and the payment of bills for Stollaire’s Hawaii condominium.
Shortly after completion of the ICO, Stollaire and TBIS began to receive demands from some of the companies in February 2018 that he and TBIS immediately stop referencing the companies and their logos. The defendants removed from TBIS’s offering materials the names and logos of the companies, with Stollaire responding to at least one company “I did not know that a procedure would need to have been followed, etc.” As of May 21, 2018, the logos of several of the companies are still present on EHI’s website.
In addition to falsely promoting TBIS’s and EHI’s supposed relationships with the well-known companies, the defendants fictionalized a series of client testimonials that they used on TBIS’s and EHI’s websites. The testimonials were false and misleading in several ways: either the person quoted no longer worked at the company, the person’s quoted name and/or title was fake, and/or the company had not authorized the publication of any testimonials.
Around the same time that the defendants were receiving cease-and desist letters from the companies whose names and logos they were improperly using, the defendants announced that in “a malicious act,” approximately 16 million BAR digital assets held by TBIS that could be sold at any time, were stolen in an “illegal theft” thereby devaluing BAR. To address the theft, defendants created a replacement digital asset, TBAR, to issue to BAR investors on a 1:1 basis.
Faced with a conundrum following the company demand letters and BAR theft, defendants needed to shift their marketing campaign in order to continue with their scheme to promote TBIS and inflate the value of BAR/TBAR, which the defendants themselves still held. The defendants deflected attention away from TBIS’s ersatz customers that had been the centerpiece of its touting: the well-known companies’ names and logos. Now, the defendants tout purported meetings Stollaire has had with unidentified people from unidentified companies based abroad, only describing the entities as “billion-dollar companies” in emerging non-U.S. markets.
The defendants also touted various trademark-protected intellectual property, services, products, and a slogan that were mentioned in earlier materials, and created a new one to tout, “VORDEXTM,” a purported peer-to-peer cryptocurrency exchange. Each of these trademarked names and phrases was intended to validate TBIS’s purported business as a provider of a vast number of blockchain-based IT services. Critically, however, the defendants never owned any of these trademarks. Nevertheless, following the changed marketing campaign, the defendants now highlight these services, including in TBIS’s weekly update. As recently as April 20, 2018, TBIS announced it “is proud to present VORDEX!”
Stollaire continues to appear for interviews about TBIS and the defendants continue to regularly post on social media in furtherance of the “inflate” part of this scheme. For example, to attempt to create interest and drive up trading volume for BAR/TBAR, on April 27, 2018, the defendants announced a “South Korean Liaison” to promote TBIS “in one of the world’s largest crypto markets” and to focus on “large South Korean exchanges.” On May 4, 2018, the liaison stated she was “getting our token listed on the largest Korean exchanges” and “sourcing Korean ~ crypto influencers to help get the word out.”
Also on May 4, 2018, TBIS hinted about TBAR trading developments ~ stating, “We are excited to announce that TBAR will be listed on a well known ~ exchange soon. We will make an official announcement after TBAR is live on their platform.” TBIS followed up with an announcement on May 14, 2018: “TBAR Listed on HitBTC!,” a digital asset platform.
By lying to investors and perpetrating a fraudulent scheme through the TBIS ICO, each of the defendants violated the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule l Ob-5 thereunder. In addition, Stollaire and TBIS also violated the securities offering registration provisions of Section 5 of the Securities Act.
– Source sec.gov
Titanium Official Response
Titanium Blockchain Infrastructure Services is subject to a receivership order entered by the United States District Court for the Central District of California. The receivership order was part of a Temporary Restraining Order (TRO) issued in connection with an action filed by the U.S. Securities and Exchange Commission (SEC).
Titanium has cooperated with, and fully intends to continue cooperating with the SEC’s investigation in accordance with the terms of the TRO. As is often the case, a receiver was appointed in this matter (Case No. 18-4315 DSF (JPRx)). Titanium’s receiver has just begun his efforts to identify assets of the company. He will work closely with the SEC and TBIS to achieve the best possible outcome for Titanium’s community of token holders, employees, and associates.
Please find a copy of the SEC’s written statement issued on May 28, 2018 here: https://www.sec.gov/news/press-release/2018-94. More information will be made available in the coming days. Further information on behalf of TBIS Inc. will be issued through, or on behalf of, Titanium’s court appointed receiver. Additional information may also be made available by the SEC.
TBIS official Telegram chat (https://t.me/TbisOfficial) is no longer managed. Information posted there and on other social media sites may contain false statements, including those made by individuals associated with and/or impersonating one or more Titanium employees or officers.
We leave you in the best possible hands and welcome the objectivity of our receiver and the SEC. Per instruction, and as usual, product development continues quietly in the background.
We are Titanium
– Source steemit.com