Titanium Blockchain CEO pleads guilty to $21 million crypto fundraising scam

Illustration by Alex Castro / The Verge

The CEO of TitaniumBlockchain Infrastructure Services has pleaded guilty to securities fraud. The man from California admitted to faking information around the BAR coin, which should have been registered with the SEC.

There were many fraudulent initial coin offerings in the late ‘90s. According to the complaint, the company was introduced as a new company and promoted its coin with a lot of false claims. There are no links with companies like Apple. Some of the partners complained that they didn't know a procedure would need to be followed. The company had not registered any of its trademark services. The services seem to have not existed and the business associated with them was an IT contractor.

The list of non-trademarks includes inane terms like "company as a service", as well as exciting products like "Vordex."

The TBIS whitepapers and other marketing materials included detailed descriptions of several products and services that would be available on the TBIS platform, as well as slogans that TBIS used: Company as a Service™, Bring Your Own Cloud™ (BYOC™), DEXchange™, Mining as a Service™, Instant ICO Incubator™, Desktop as a Service™ (DaaS™), CryptoEscrow™, The Ultimate Strength of the Blockchain … Unleashed™, VORDEX™.

In a white paper, the project promised that its BAR token would be useful for accessing a platform that offered real services. It signed up at least 75 people who paid in cash and others who paid with other cryptocurrencies and took in $21 million. The money was used to pay off credit card bills, as well as non-TBIS payments like the ones for the condo in Hawaii.

TBIS issued a second coin, TBAR, to replace the one that had been hacked. The original bar coin was traded on exchanges.

The SEC created a fake site to warn buyers about scam artists during the surge of coin-based raising that Titanium was a part of. The legal system is still catching up to the use of non-fungible token projects. The fraud charge carries a maximum sentence of 20 years in prison.