The CEO of a blockchain company has entered a guilty plea to securities fraud after posting fake reviews and endorsements and failing to use investments for their intended purposes.
The Justice Department announced that Michael Alan Stollery of Titanium Blockchain Infrastructure Services Inc. admitted to issuing false white papers, posting fake client testimonials to persuade others to invest in his company’s coin, and using funds raised for his company’s initial coin offering for personal use.
New investments, old crimes
Although cryptocurrency is relatively new, the crimes law enforcement is investigating are not. A person can be charged with securities fraud for a range of activities “all of which involve the deception of investors or the manipulation of financial markets.”
Stollery’s plea also brings attention to the Consumer Financial Protection Bureau’s recent policy announcements regarding fake reviews. The CFPB has announced its position that fake reviews and endorsements are a form of fraud that will be pursued by that office. In its statement, the CFPB announced that it issued warnings to companies about their use of fake reviews. Notably, private companies like Amazon are starting to crack down on fake reviews in civil suits.
Stollery is expected to be sentenced later this year.