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According to a press release Tuesday, the Securities and Exchange Commission (SEC) obtained a court order to cease the operations of a fraudulent ICO that raised as much as $21 million. The entity behind the scam, Titanium Blockchain Infrastructure Services Inc. also had its assets frozen by the court.

A complaint from the SEC proclaims that Titanium President Michael Alan Stollery, a.k.a. “Michael Stollaire“, purposely misled investors by claiming business relationships with the Federal Reserve and dozens of well-known firms such as PayPal, Walt Disney, Boeing, and Verizon. Titanium’s website contains counterfeit endorsements from corporate customers and that Stollaire falsely represented the company as having relationships with numerous corporate clients.

Stollaire also fraudulently promoted his ICO through videos and social media and compared it to investing in “Intel or Google.” 

“This ICO was based on a social media marketing blitz that allegedly deceived investors with purely fictional claims of business prospects,” said Robert A. Cohen, Chief of the SEC Enforcement Division’s Cyber Unit. “Having filed multiple cases involving allegedly fraudulent ICOs, we again encourage investors to be especially cautious when considering these as investments.”

The SEC filed the complaint on May 22 in federal district court in Los Angeles and charged Stollaire and his company with violating the antifraud and registration provisions of the federal securities laws. Another Stollaire company, EHI Internetwork and Systems Management Inc., was charged in the same complaint for violating antifraud provisions.

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SEC vs ICOs

The SEC’s mission is to protect investors, maintain fair, orderly, and efficient markets and facilitate capital formation. The SEC now has an entire division devoted to blockchain technology, called the Distributed Ledger Technology Working Group (DLTWG).

According to SEC chairman, Jay Clayton, the recent warnings against fraudulent ICOs are designed to educate investors, not “undermine” the development of the blockchain industry.

“These warnings are not an effort to undermine the fostering of innovation through our capital markets — America was built on the ingenuity, vision, and spirit of entrepreneurs who tackled old and new problems in new, innovative ways. Rather, they are meant to educate Main Street investors that many promoters of ICOs and cryptocurrencies are not complying with our securities laws and, as a result, the risks are significant.”

The legal and regulatory framework related to virtual currencies is evolving rapidly in this ambiguous space. Given the recent actions to punish bad actors in the market and educate the public on potential risks, we can assume there will be a more to come, as the market is rife with Ponzi schemes and other fraudulent activities.

More: SEC Obtains Emergency Order Halting Fraudulent Coin Offering Scheme
Similar: SEC Charges Centra Tech “Mastermind” With Fraud for $32 Million ICO Scheme
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