SEC Sues for Unregistered Offering of Digital Tokens and Unauthorized Minting Scheme

The US Securities and Exchange Commission has brought civil enforcement charges against Amir Bruno Elmaani, also known by his online moniker “Bruno Block.”  The SEC charges two categories of securities violations: (1) an illegal securities distribution of digital tokens, and (2) a scheme to enrich by minting unauthorized tokens at no cost and dumping them into the secondary market, thus causing the token price to crash.

The SEC complaint contends that in 2017 Elmaani offered and sold millions of digital tokens known as “Pearl tokens” raising approximately $1.3 million.  The SEC’s complaint further contends these tokens were securities (as they were investment contracts), but they were not properly registered with the SEC Commission.  To compound his federal securities problems, Elmaani was alleged to have then used a series of digital wallets to secretly mint around four million unauthorized Pearl tokens at no cost, and to have commenced selling them in the secondary market, reaping over $500,000 in profit.  This, in turn, caused the Pearl Token’s price to plummet by almost 65% leading to substantial investor losses.

The SEC complaint charges Elmaani with violations of the registration and anti-fraud provisions of the Securities Act of 1933, as well as the anti-fraud provisions of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

While the technology continues to evolve in the digital coin space, the same, old-school principles of law continue to apply to SEC enforcement cases.  As in this case – namely:  (1) is the digital coin an investment contract and thus a security under the Howey decision, (2) if the digital coin is a security was it properly registered with the Commission for sale, or subject to an exemption, and (3) did the flooding of the market with an unregistered security by the principal of the issuer, created at no cost, which caused massive dilution of the price and harm to investors, constitute a fraudulent scheme, artifice or device.  Evidently, the SEC in this case has given its very clear answers to all three questions.

David R. Chase, a SEC defense lawyer, represents individuals and companies nationwide in SEC investigations, SEC litigation and SEC administrative cases.  If you are under investigation by the SEC, FINRA or the Department of Justice, call SEC defense lawyer David Chase for a no cost, confidential consultation toll-free at: (800) 760-0912 or

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