Former New Jersey Corrections Lieutenant Faces SEC Charges in Cryptocurrency Fraud Targeting First Responders
Ex-corrections officer DeSalvo faces SEC charges for crypto scam targeting first responders, resulting in substantial losses.
Fri, 25 Aug 2023, 08:31 am UTC
John A. DeSalvo, a former lieutenant with New Jersey's Department of Corrections, is now under scrutiny by the U.S. Securities and Exchange Commission (SEC) due to alleged involvement in a cryptocurrency fraud scheme primarily aimed at police officers and emergency medical personnel.
The official announcement, issued on August 23, outlines DeSalvo's questionable activities. Between November 2021 and May 2022, he managed to convince 222 investors to collectively invest $623,388. His pitch revolved around the concept of the self-created Blazar token, touted as an alternative to existing state pension systems for police, firefighters, and paramedics. He also promised substantial financial gains.
However, suspicions arose when DeSalvo informed investors that his token had received SEC approval as a "securitized token." In reality, the SEC had never granted any such authorization. Adding to the inconsistencies, DeSalvo notified investors of an "initial lock-up" phase, which he contradicted by selling 41 billion Blazar tokens—equivalent to $51,000—immediately upon their release on the decentralized PancakeSwap exchange in May 2022.
The aftermath was disastrous for investors. While they were prohibited from trading their Blazar tokens, DeSalvo was actively selling his own. By May 22, just a couple of weeks after DeSalvo's PancakeSwap transaction, the Blazar token's value plummeted, erasing over 99.9% of its initial worth. The SEC highlighted that DeSalvo's extensive selling directly impacted the Blazar Token's market price, resulting in significant strain on PancakeSwap's resources. This sequence of events led to the investment's collapse, causing substantial losses for investors.
The SEC is now advocating for stringent actions against DeSalvo. The Commission aims to prevent his participation in future security offerings, pursue civil penalties, and reclaim the profits gained through illicit means.
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