Amir Elmaani, the 31-year-old founder of the now-defunct cryptocurrency scheme Oyster Protocol, has received the maximum penalty of four years in prison for his involvement in tax evasion.
The United States Attorney’s Office announced the sentencing on October 31, following Elmaani’s guilty plea on April 6.
In his confession, he admitted to secretly creating and selling Pearl tokens without paying income tax on the substantial profits generated by the project, resulting in tax losses exceeding $5.5 million.
U.S. District Attorney Damian Williams expressed his stance on the matter, stating, “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.”
Elmaani’s deceptive actions unfolded between September and October 2017 when he promoted a cryptocurrency named Pearl (PRL) as an investment opportunity tied to the blockchain-based data storage platform, Oyster Protocol.
Unknown to the Oyster Protocol team and investors, Elmaani covertly generated a large quantity of new PRL tokens and introduced them into the market for his personal gain in October 2018.
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In his plea agreement, Elmaani admitted, “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.”
Despite amassing millions of dollars from this illicit scheme, Elmaani falsely reported his income in his tax returns, claiming he had earned a mere $15,000 from a patent design business in 2017 and declared zero income in 2018.
Court investigations revealed that in 2018, Elmaani spent over $10 million on multiple yachts, $1.6 million at a carbon-fiber composite company, hundreds of thousands of dollars at home improvement stores, and more than $700,000 on two homes.
One of these homes was acquired through a shell company, while the other was registered in the names of two of Elmaani’s associates.
Additionally, he engaged extensively in precious metals trading and stored gold bars in a safe on one of his yachts.
Prosecutors uncovered that Elmaani utilized friends and family as intermediaries to receive cryptocurrency proceeds and subsequently transfer them to his accounts.
In addition to his four-year prison term, Elmaani has been sentenced to one year of supervised release and has been ordered to pay $5.5 million in restitution.