Key Takeaways
- DeSalvo faces charges including two counts each of wire fraud, securities fraud, and money laundering
- DeSalvo in 2021 made false assertions that the coin had obtained approval from the Securities and Exchange Commission
John A. DeSalvo, a former lieutenant at the New Jersey Department of Corrections, is facing charges from the U.S. Securities and Exchange Commission (SEC) for allegedly orchestrating a cryptocurrency scam that specifically targeted police officers and first responders.
The announcement on August 23 revealed that DeSalvo raised approximately $623,388 from 222 investors between November 2021 and May 2022 through sales of his own token called Blazar.
DeSalvo’s scheme involved enticing first responders with promises that the Blazar token would revolutionize traditional state pension systems for individuals in professions such as police, firefighting, and paramedics. He claimed that the token could be purchased through payroll deduction each week, similar to contributions made to pension plans or retirement savings accounts. Investors were lured in with guaranteed returns of over 20% and claims of zero risk.
The former corrections officer also reportedly solicited around $100,000 from members of an online investment group using a similar scam approach. In both instances, DeSalvo allegedly diverted most of the funds to unrelated expenses.
DeSalvo faces charges including two counts each of wire fraud, securities fraud, and money laundering. He was scheduled to appear in Newark federal court to address the charges.
The Blazar Token, created by DeSalvo in 2021, was marketed to first responders through social media platforms, where he made false assertions that the coin had obtained approval from the Securities and Exchange Commission and would be available for purchase on major exchanges. Investors were restricted from selling their Blazar tokens while DeSalvo offloaded his own holdings. However, by May 22, the token had plummeted by over 99.9% in value, leading to significant investor losses and the collapse of the token’s trading price.
The SEC seeks to permanently enjoin DeSalvo from engaging in security offerings, in addition to imposing civil penalties and requiring disgorgement of profits. The regulatory body has alleged that DeSalvo falsely represented the Blazar token’s relationship with the SEC, claiming that it had been “securitized” with the regulatory agency when it had not received official registration.
The SEC has increased its scrutiny over the crypto space in recent months. Earlier this year, SEC has charges Tron Founder Justin Sun claiming that Sun engaged in market manipulation and the unregistered offer and sale of securities by dealing with his crypto assets TRX and BTT.
