SEC charges cryptocurrency company with fraud in $21M ICO

May 29 (UPI) -- The U.S. Securities and Exchange Commission charged a cryptocurrency company with ongoing fraud related to a $21 million fundraising effort.

In addition to the court order to halt the operation, the SEC also received court approval to freeze assets of Titanium Blockchain Infrastructure Services Inc., the firm behind the alleged scheme.

The SEC complaint charges Titanium President Michael Alan Stollery, aka Michael Stollaire, with lying about business relationships with the Federal Reserve, and well-known companies such as PayPal, Verizon, Boeing and The Walt Disney Company.

Stollaire allegedly promoted the initial coin offering -- a fundraising attempt in which a company creates a new virtual coin or token and offers it for public sale -- through videos and social media, comparing it to investing in Intel or Google, while also fraudulently claiming relationships with numerous corporate clients.

"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.

The SEC also alleges Titanium's website contained fabricated testimonials from corporate customers.

Stollaire was charged with violating the anti-fraud and registration provisions of the federal securities laws, while another one of his companies, EHI Internetwork and Systems Management Inc., was charged with violating the anti-fraud provisions.

The SEC has been working to increase enforcement against fraudulent ICOs, while state and provincial regulators in the United States and Canada announced a similar crackdown on potentially deceitful cryptocurrency investment products last week.

"Having filed multiple cases involving allegedly fraudulent ICOs, we again encourage investors to be especially cautious when considering these as investments," Cohen said.