• A former New Jersey Corrections Officer, John DeSalvo, was arrested for targeting law enforcement and first responders in an investment scheme involving a digital token.
• DeSalvo promised investors a “crypto pension” with the false claim that the token was either in the process of being approved or had already received approval from the SEC.
• Over 200 investors contributed more than $620,000 to the scheme, only to have their funds misappropriated and misused by DeSalvo.
Former NJ Officer Arrested
A former corrections officer from New Jersey has been arrested for targeting law enforcement and first responders in an investment scheme involving a digital token. John DeSalvo , 47-year-old resident of Marmora, New Jersey, allegedly created and promoted the Blazar Token promising investors a “crypto pension” that could supplement their pension plans according to an announcement from the Securities and Exchange Commission (SEC).
False Claims Targeting First Responders
DeSalvo claimed that the token was either in the process of being approved or had already received approval from SEC prompting over 200 investors, primarily police, fire personnel, and EMTs to contribute more than $620,000 to his scheme. He told investors that they could purchase tokens through payroll deductions similar to payment into retirement savings plans such as 401k or IRA accounts.
Misuse Of Funds
In May last year, DeSalvo sold billions of his own Blazar tokens while other investors were barred from selling theirs causing its price to plummet by more than 99%. This resulted in significant losses for most investors involved as their funds were misappropriated and misused by DeSalvo according to claims made by Gurbir S. Grewal, director of SEC’s enforcement division.
SEC Seeking Permanent Injunction Against Desalvo
The SEC is seeking a permanent injunction against Desalvo barring him from security offerings along with civil penalties and disgorgement of profits gained through illegal activities. This enforcement action comes just days after OpenSea’s former head of product was sentenced to three months in prison for using inside knowledge to trade NFTs whereas back in March eight celebrities were charged with illegally promoting two cryptocurrencies without disclosing they were paid for it.
Conclusion
The SEC is increasing its scrutiny when it comes crypto investments as this kind of fraud can be hard on unsuspecting victims who are looking for legitimate ways to invest their money into cryptocurrency projects.