- Two US government agencies filed an action against Oyster Pearl founder Amir Bruno Elmaani.
- Elmaani receives a 10-year sentence in prison for doing an exit scam.
- Moreover, he evaded reporting crypto income to the IRS.
Two US government agencies filed an action against crypto project founder Amir Bruno Elmaani and gave a verdict of 10-year imprisonment for pulling an exit scam.
Elmaani evaded reporting crypto income to IRS
Elmaani is the creator of Oyster Pearl, a blockchain protocol. However, he allegedly made millions of dollars from an ICO of Oyster Pearl’s native token PRL in 2017. Moreover, these tokens are reportedly used for purchasing online data storage that fueled the Oyster protocol.
The Department of Justice (DOJ) alleges that Elmaani evaded reporting his crypto income to the Internal Revenue Service (IRS). In addition, he falsified his 2017 tax return and failed to file one in 2018.
As per the DOJ statement, FBI Assistant Director William Sweeney stated:
Elmaani was funneling the proceeds of his alleged cryptocurrency scheme through a shell company that hid the true nature of his financial interests.
Despite that, Elmaani used $10 million in proceeds to purchase real estate, multiple yachts, and home renovations. Additionally, he spent $1.6 million at a carbon-fiber composite firm. More so, the maximum criminal charge penalty for tax evasion is five years per count.
Elmaani will be facing up to 10 years in federal prison. Meanwhile, the Securities and Exchange Commission (SEC) filed a separate civil action against Elmaani. They charged him for conducting an illegal securities offering of PRL tokens.
Elmaani involved in an exit scam
In late October 2018, the exit scam began when Elmaani minted new pearl tokens for his own personal use. However, increasing its total supply even though the number of pearl tokens was fixed.
He immediately converted the new tokens to other types of crypto tokens. Thereby, exchanges delisted the token, sending the price to plummet.
The DOJ explained,
Elmaani carried out the exit scheme only days before the exchange he had used to cash out his pearl tokens was set to require ‘know your customer’ personal identifying information from its users.
Furthermore, he inflated the fixed PRL supply through his access to the protocol. Elmaani converted his newly minted PRL tokens to other cryptocurrencies using a foreign-based exchange. After discovering the alleged foul play, the exchange ceased all trading for PRL.
Moreover, Elmaani made approximately $570,000 in illicit gains through the minting and sale of Pearl tokens. Even more, the PRL price fell by nearly 65%, resulting in significant losses for investors. According to CoinGecko, the PRL price is at $0.51, at the time of writing.