Elmaani pleaded guilty in April 2023, agreeing that he caused a tax loss of over $5.5 million.

Amir Bruno Elmaani, aka “Bruno Brock,” founder of the blockchain protocol Oyster Pearl, has been handed a four-year jail term for tax offenses, the U.S. Department of Justice (DOJ) announced on Tuesday.

Elmaani, 31, of Martinsburg, West Virginia, was also sentenced to one year of supervised release and ordered to pay restitution of $5.5 million, the estimated tax loss. Elmaani pleaded guilty in April 2023. He had initially been charged in 2020 separately by the Internal Revenue Service (IRS) and the Securities and Exchange Commission (SEC) with assistance from the Federal Bureau of Investigation and the Commodity Futures Trading Commission.

Elmaani used a coin mixer to conceal the true destination of cryptocurrencies on the blockchain before transferring funds to family members and friends and then to himself, according to the DOJ.

The origins of the case go back to 2017 when Elmaani made “millions of dollars” from an initial coin offering of its pearl (PRL) cryptocurrency, but instead of reporting the income from sales, he falsified his tax return and then used $10 million in proceeds to buy multiple yachts (where he stored gold bars), real estate and home renovations.

“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,” Elmaani admitted in the plea agreement, according to the announcement. “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.”

“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,” said U.S. Attorney Damian Williams. “Participants in the cryptocurrency markets must play by the rules, and this Office will be tireless in prosecuting those who do not.”

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New OECD-inspired tax evasion plans take a step further than the MiCA but haven’t settled how to deal with foreign providers

The European Commission plans to make crypto companies report user holdings to tax authorities, it said Thursday – but the European Union (EU) body says it’s still working on how to enforce the measures on wallet providers or exchanges based outside the bloc.

As previously reported by CoinDesk, the proposed new tax rules, known as the eighth Directive on Administrative Cooperation or DAC8, seeks to halt billions of euros in evasion by taxpayers stashing crypto abroad.

“Anonymity means that many crypto-asset users making significant profits fall under the radar of national tax authorities. This is not acceptable,” Paolo Gentiloni, EU Commissioner for tax, said in a statement.

When asked how the EU will enforce the measures on companies outside the bloc, Gentiloni told reporters, “we will work on that. What counts for us is that EU residents are targeted by these measures,” even if they use crypto providers from elsewhere, he said.

Gentiloni’s measures would further the EU’s Markets in Crypto Assets Regulation (MiCA), which allows foreign companies to gain EU clients using a procedure called reverse solicitation.

The tax plan requires any company with EU clients to register and report within the bloc, but may face logistical challenges in a sector where companies are largely online and sometimes claim not to have headquarters at all.

The widely-touted plans, which will also apply to some providers of non-fungible tokens (NFTs), have drawn immediate reactions from industry observers.

In a statement, the European Crypto Initiative said of the plan that it was “concerned that it would apply to a far wider range of obliged entities and individuals” than MiCA, which the lobby group said meant “diluting MiCA’s initial concept and potentially weakening its effect.”

Others have been more calm over the plans, noting that the 38 developed countries in the Organization for Economic Co-operation and Development (OECD) have already developed norms to stop tax being evaded in overseas bank accounts, which they now want to spread to crypto.

“Exchange of information across borders already happens in the tax world and authorities are keen to expand the scope of these data sharing arrangements to crypto asset transactions,” Danny Talwar, Head of Tax at Koinly, told CoinDesk in a statement.

Dea Markova, Managing Director at Forefront Advisers, told CoinDesk that the plan “stands to touch global players who may have otherwise avoided the need to get licensed.”

“An ‘EU crypto tax’ is not on the cards,” Markova said, with any tax law needing unanimous agreement of 27 finance ministers, but added that, politically speaking, “it will be difficult to argue that the proposal should be any less expansive in scope or granularity than it is.”

The commission believes its new plans will generate as much as 2.4 billion euros ($2.5 billion) for national coffers by making crypto tax evasion harder. Any loophole for foreign providers could mean tax goes missing, with registered EU companies disadvantaged.

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