The US Securities and Exchange Commission (SEC) has obtained a court order halting an allegedly fraudulent Initial Coin Offering (ICO) ), which has raised up to $21 million from thousands of investors in the U.S. and abroad.
According to the SEC’s complaint filed in Los Angeles court on May 22, Titanium Blockchain used social media, fabricated testimonials, and other dissemination tactics to raise what it claims to be over $20 million of its $35 million goal. The company did this in a matter of three months, from December 2017 to March 2018.
Titanium Blockchain was touted as a new blockchain-based platform that is aiming to create the decentralized version of services such as Amazon Web Services, Rackspace, and Microsoft Azure.
However, the startup announced in February that a massive amount of BAR tokens has been stolen from the wallets of the company. The price of the original token has dropped by up to 95 percent, and exchanges have halted trade with the tokens.
The SEC obtained an emergency asset freeze against Titanium and filed charges against its founder Michael Stollaire, alleging that he sold securities claiming that investments in BAR tokens would bring highly secure distributed solutions and applications.
The SEC alleges that Titanium falsely claimed that it had signed big names as future contacts including PayPal, Verizon, Boeing, and The Walt Disney Company.
According to the order, in the course of the offering, the company and other promoters emphasized that investors could expect that efforts of the company and others would lead to an increase in the value of the tokens.
Titanium’s case is the latest to be brought by the SEC’s new cyber unit, which was created in September to target violations involving distributed ledger technology and initial coin offerings as part of a new effort to fight cyber-crime.
Mock website to highlight ICO risks
The US top regulator has repeatedly warned investors against throwing money into the crowdsale because the company intended to launch a cryptocurrency-based investment scheme without even attempting to follow US securities laws.
Earlier this month, the SEC’s Office of Investor Education and Advocacy (OIEA) has created a bogus initial coin offering (ICO) website that advertises a ‘too good to be’ true investment opportunity. The regulator said it wants to explain that as with many other hyped markets, scammers are never far behind in trying to take advantage of cryptocurrency-based schemes.
Commenting on the news, Robert A. Cohen, Chief of the SEC Enforcement Division’s Cyber Unit, said: “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.”
