Southern District of New York | Cryptocurrency Founder “Bruno Block” Sentenced To Four Years In Prison

Damian Williams, the United States Attorney for the Southern District of New York, announced that AMIR BRUNO ELMAANI, a/k/a “Bruno Block,” the founder of the cryptocurrency “Oyster Pearl,” was sentenced to four years in prison, the maximum sentence allowed by statute, for tax offenses ELMAANI committed in connection with the Pearl token.  ELMAANI had previously pled guilty on April 5, 2023, before U.S. District Judge Colleen McMahon, who imposed today’s sentence.  In connection with his guilty plea, ELMAANI admitted that he had secretly minted and sold for his own gain Pearl cryptocurrency tokens, which caused the price of Pearl tokens to plummet, and that he did not pay income tax on certain cryptocurrency profits.  ELMAANI agreed that he caused a tax loss of over $5.5 million.   

U.S. Attorney Damian Williams said: “Amir Elmaani violated the duty he owed to pay taxes on millions of dollars of cryptocurrency profits, and he also violated the trust of investors in the cryptocurrency he founded.  Participants in the cryptocurrency markets must play by the rules, and this Office will be tireless in prosecuting those who do not.”

Based on the allegations in the Indictment, in the Superseding Information to which ELMAANI pled guilty, the plea agreement, and other statements made and documents filed in court:

In September and October 2017, ELMAANI began promoting online a new cryptocurrency known as Pearl tokens.  Using a variation of his online pseudonym “Bruno Block,” ELMAANI stated that he planned to develop an online data-storage platform, known as Oyster Protocol, which would allow users to purchase online data storage with Pearl tokens.  Instead of using his real name, ELMAANI operated almost exclusively online under the pseudonym “Bruno Block.”  ELMAANI concealed his true identity from his prospective employees and business associates and never met them in person.

In the fall of 2017 and thereafter, ELMAANI sold Pearl tokens to the investing public through an “initial coin offering” and on cryptocurrency market platforms.  ELMAANI announced that he intended to take a “founder’s share” of Pearl tokens for his own personal use.  ELMAANI owned and controlled the subsequently established company Oyster Protocol Inc. through a shell company not associated with his true name. 

In a statement issued under ELMAANI’s online pseudonym on June 7, 2018, ELMAANI stated that he was retaining millions of Pearl tokens as his “ownership stake” in Oyster Protocol, but that he had to move the tokens to a different cryptocurrency wallet “in order to avoid being double-taxed.”  In truth, ELMAANI did not report or pay tax on any of his cryptocurrency proceeds.  At various points, ELMAANI used friends and family as nominees to receive cryptocurrency proceeds and transfer them or U.S. currency to his own accounts. 

ELMAANI dealt substantially in precious metals, kept gold bars in a safe on a yacht he owned, and used large amounts of cash to pay personal expenses. 

In late October 2018, although the number of Pearl tokens was purportedly fixed, ELMAANI used his access to the blockchain technology used to create Pearl tokens to mint new tokens, which he took for his own personal use (the “Exit Scheme”).  ELMAANI thereby increased the total volume of Pearl tokens.  Shortly after creating the new tokens, ELMAANI converted the Pearl tokens he had obtained to other types of cryptocurrency on an online marketplace or exchange.  As a result of ELMAANI’s conduct, trading in Pearl tokens halted on that exchange and the price of Pearl tokens held by investors dropped substantially.  Pearl tokens were subsequently de-listed from the primary exchange where they were traded.  Subsequent to the Exit Scheme, ELMAANI used his friends and family to receive cryptocurrency and to transfer funds to a bank account in his name. 

While ELMAANI initially attempted to hide even “Bruno Block’s” involvement in the Exit Scheme, he later effectively admitted to the conduct online under his “Bruno Block” pseudonym.  In a recorded call with the then-chief executive officer (“CEO”) of Oyster Protocol Inc. after the Exit Scheme, the CEO asked ELMAANI why he had to take the additional new Pearl tokens if he had already cashed out millions of dollars’ worth of Pearl tokens in the past.  ELMAANI responded, in part, that “taxes are pretty nasty.”   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. 

In connection with his plea, ELMAANI admitted in the plea agreement that:

In or about 2017, using the alias “Bruno Block,” I began an online project called the “Oyster Protocol.”  In support of this project, an initial coin offering (“ICO”) was held in or about October 2017, in which a token named “Pearl” (“PRL”) was issued.  I stated in public forums that after the ICO, the supply of PRL would not increase, and that the smart contract that created PRL would be “locked.”  Contrary to these statements, on or about October 29, 2018, I used the smart contract to mint new PRL, without telling anyone, including others who worked on the Oyster Protocol project.  I then sold these newly minted PRL on a digital trading platform.  I was aware that the counterparties who were buying these newly-minted PRL likely were not aware of my reopening of the smart contract and did not know that I had just substantially increased the total supply of PRL.  After Oyster management learned of my reopening of the smart contract and alerted the public, the price of PRL plummeted.       

ELMAANI filed a false 2017 tax return stating that he had only approximately $15,000 of income from a “patent design” business, and he filed no return and reported no income to the IRS in 2018.  Nevertheless, ELMAANI spent, in 2018, over $10 million for the purchase of multiple yachts, $1.6 million at a carbon-fiber composite company, hundreds of thousands of dollars at a home improvement store, and over $700,000 for the purchase of two homes, one of which was titled in the name of a shell company and the other in the name of two of his associates.  The tax loss to the United States from ELMAANI’s conduct was approximately $5,523,794.

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In addition to the prison term, ELMAANI, 31, of Martinsburg, West Virginia, was sentenced to one year of supervised release and was ordered to pay restitution in the amount of $5,523,794.

Mr. Williams praised the investigative work of the Internal Revenue Service and the Federal Bureau of Investigation and also thanked the Securities and Exchange Commission and the Commodity Futures Trading Commission for their assistance. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Margaret Graham and Adam Hobson are in charge of the prosecution.