A founder of a fraudulent cryptocurrency project called Titanium Blockchain has been sentenced to 4 years in prison by a US court after his clients lost $21 million.
Michael Stolleri launched the Titanium Blockchain Infrastructure Services (TBIS) project in 2017 and conducted an initial coin offering (ICO) that raised $21 million from investors between 2017 and 2018.
However, the ICO was not registered with the US Securities and Exchange Commission (SEC), which accused Stolleri of violating securities laws. In addition, the token rate collapsed from $1.6 to $0.03 in a few weeks, resulting in significant losses for investors.
Last July, Stolleri pleaded guilty to participating in a fraudulent scheme and violating securities laws. He admitted to falsifying certain items in TBIS white papers and posting fake customer testimonials on the project’s website.
He also admitted to making false claims about working with the US Federal Reserve to attract clients and deceive investors about the legitimacy of TBIS. Furthermore, Stolleri used client funds to pay for his expenses, including credit card bills and living in a condominium in Hawaii.
Although Stolleri faced up to 20 years in prison, the court showed leniency and sentenced him to 4 years and 3 months in prison.
However, the case highlights the growing problem of cryptocurrency fraud in the US, with the FBI reporting a 183% increase in cryptocurrency fraud cases in 2022, amounting to $2.57 billion. This is a significant increase from the $907 million reported in 2021.