According to an indictment filed in the US Southern District Court of New York, the Internal Revenue Service (IRS) has charged Amir Bruno Elmaani with two counts of tax evasion. Elmaani, otherwise known as Bruno Block, is the founder of the cryptocurrency “Oyster Pearl.”
Elmaani was arrested Wednesday morning in Martinsburg, West Virginia.
Elmaani made millions from the sale of a new cryptocurrency but evaded reporting that income to the IRS. He is guilty of filing a false tax return, operating his business and owning assets through pseudonyms and shell companies and obtaining income through nominees.
Rather than report the return of the income he had earned to the IRS, Elmaani allegedly falsified his 2017 tax return and pocketed the millions instead. He also failed to file his 2018 returns.
“As it turns out, Elmaani was funnelling the proceeds of his alleged cryptocurrency scheme through a shell company that hid the true nature of his financial interests,” said William Sweeney Jr., the FBI’s assistant director.
According to the indictment, he used $10 million to buy multiple yachts in which he stored multiple gold bars, real estate and home renovations.
Elmaani could be facing up to 10 years in federal prison as the maximum penalty of a criminal charge of tax evasion carries a maximum of five years per count.
The Securities and Exchange Commission (SEC) filed a separate charge against Elmaani. SEC is charging him with conducting an illegal securities offering of PRL tokens and profiting from “minting millions of unauthorized tokens for himself at no cost and selling them into the secondary market, thereby causing the value of others’ tokens to plummet.”
The Securities and Exchange Commission (SEC) said, “Elmaani made approximately $570,000 in illicit gains through the minting and sale of Pearl tokens and, as a result of his sales, the price of Pearl tokens fell by nearly 65%, resulting in significant losses for investors.”
FBI Assistant Director William F. Sweeney Jr. said: “Taking advantage of the ever-so-popular cryptocurrency market, Elmaani allegedly capitalized on the investments of those who purchased virtual currency through Oyster Pearl, which he founded. As it turns out, Elmaani was funnelling the proceeds of his alleged cryptocurrency scheme through a shell company that hid the true nature of his financial interests, ultimately never paying taxes on his earnings. With minimal reported income in 2018, he still managed to spend over $10 million for the purchase of yachts, but after today’s arrest, he won’t be sailing anywhere anytime soon.”
Operating under his pseudonym Bruno Brock in October 2018, Elmaani exploited a smart contract on the Ethereum blockchain to create new tokens to be sold at a low market price before creating new ones for himself for free.
As per the indictment, Elmaani at the time said he was retaining millions of PRL following his “founders share” and in the process claimed he had to move his PRL tokens to a different wallet to avoid double taxation.
Elmaani was able to convert his newly minted PRL tokens to other cryptocurrencies using a “foreign-based exchange” by inflating the fixed supply of PRL through his access to the protocol.
Elmaani made approximately $570,000 in illicit gains. After discovering the alleged foul play, the exchange ceased all trading for PRL which left investors holding bags of essentially worthless tokens.
Concealing the origin and destination of the cryptocurrencies by the use of a coin mixer, Elmaani transferred funds to family members and friends after which he transferred them to his own accounts.
“The underlying scheme was old-fashioned fraud and tax evasion,” said Audrey Strauss, acting Manhattan U.S. attorney. “Thanks to the FBI and IRS Criminal Investigation Division, Elmaani is now in custody and facing federal prosecution.” said acting Manhattan U.S. Attorney Audrey Strauss.