Amir Bruno Elmaani, aka “Bruno Block,” was arrested and charged with a multimillion-dollar tax evasion scheme that came from the Ethereum blockchain-based Oyster Protocol native cryptocurrency named ‘Pearl’ ($PRL) that he created.
A press release from the US Attorney’s Office for the Southern District of New York, the SEC also filed civil charges against Elmaani – related to an exit scam assumed to be perpetrated by Mr. “Block.” Elmaani supposedly failed to list the earnings from the Oyster Protocol token sale, which raised 300 ETH. The defendant sold more of his Pearl tokens through a secondary market.
He profited from an exit scheme last October 2018, when he allegedly exploited a smart contract to re-open the crowd sale and took out Pearl tokens, kills the project in the process. At the same time, Oyster has a market cap of around $15 to $20M, and the token has been valued at around $0.20.
The exploit permitted 1 ETH to be sent to the Oyster token agreement in exchange for 5,000 PRL. ETH can then be withdrawn while the newly-minted PRL has been sold on KuCoin. The process can be repeated repeatedly, at least until people got wise and the transactions were stopped.
He created new tokens, although the supply was meant to be fixed, then exchanging it for other cryptocurrencies and cashing it out. Oyster Protocol runs on the Ethereum Blockchain; because of this, the federal investigators were able to track Pearl and Ether tokens’ movement through a “foreign-based exchange.”
Notwithstanding this, in the unsealed indictment, “The only income reported on the 2017 Return was self-employment income of approximately $1500, from a business described as ‘patent design.'”
The government says that he didn’t file a return at all in 2018. It caught the Justice Department’s eye, for he was able to spend more than $10M on yachts, $1.6M at “carbon fiber composite company,” and over $1.1M on homes and home repairs in 2018.
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