SEC Charges Ex-Corrections Officer for Alleged Involvement in a Sham Crypto Scheme
- The SEC charged John A. DeSalvo, a former lieutenant at the New Jersey Department of Corrections.
- The regulator claims that DeSalvo duped investors via a crypto scheme that had first responders in its crosshairs.
- DeSalvo is accused of creating the Blazar token and raising $600,000 by misleading investors.
- While promising that insiders were prohibited from selling Blazar, he sold his entire bag while investors lost money.
The United States Securities and Exchange Commission (SEC) has charged John A. DeSalvo, a former lieutenant at the New Jersey Department of Corrections, over his alleged involvement in a cryptocurrency scheme that had police officers and first responders in its crosshairs. The regulator is seeking a permanent injunction against DeSalvo, barring him from security offerings as well.
According to the official statement from the SEC, the former corrections officer allegedly raised close to $623,388 from 222 investors by promoting his own cryptocurrency called the Blazar token from November 2021 to May 2022. DeSalvo touted the token by claiming that Blazar would “replace traditional state pension systems” for police, firefighters, and paramedics and provide lucrative returns to the holders.
“Blazar Token is the first token or coin that is able to be purchased through payroll deduction every week. It will be taken out of one’s weekly earnings pretax, similar to payment into a pension, 401k, IRA, or any other retirement savings plan,” said Blazar as per the SEC.
DeSalvo also claimed that his cryptocurrency had become “a securitized token with the SEC,” which was a false statement to mislead investors. While telling investors that the tokens would be locked up for insiders during the initial period, DeSalvo sold close to 51 billion tokens, which were worth $51,000 at the time when the token debuted on PancakeSwap in May 2022.
Interestingly, the SEC claims that investors were not allowed to sell the token while DeSalvo sold all the tokens he held in his bag, thereby crashing the token’s price to nothing less than two weeks after DeSalvo’s PancakeSwap sale.
“DeSalvo’s massive volume of sales placed downward pressure on the Blazar Token’s trading price and drained PancakeSwap of the majority of its liquidity in the investment, resulting in its collapse and substantial investor losses,” said DeSalvo.
It is crucial to note that the SEC is seeking civil penalties and disgorgement of profits from DeSalvo, and there is a possibility for the former corrections officer to face prison as well.
As per an earlier report, Americans lost $185 million to romance crypto scams between January 2021 and March 2022. The numbers continue to pile up, and regulators have become quite active.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
