Crypto Scam Summary
- SEC has charged John A. DeSalvo with an alleged crypto scam involving the Blazar Token and misappropriation of investor funds.
- DeSalvo allegedly made false claims about the token’s potential to replace traditional pension systems and misused investor funds.
- SEC emphasizes the targeting of law enforcement personnel and misuse of investor funds in their complaint.
Charges from the SEC
The Securities and Exchange Commission (SEC) has accused former New Jersey State Correctional Police Officer John A. DeSalvo of orchestrating a fraudulent scheme involving the Blazar Token, a crypto asset security he created. The regulator has charged DeSalvo for allegedly raising approximately $620,000 through an unregistered offering of the Blazar Token, which collapsed in May 2022. The complaint alleged that DeSalvo falsely claimed the Blazar Token was registered with the SEC, thereby misleading investors. He is also said to have misappropriated investor funds, some of which were used for personal purposes such as bathroom renovations.
Targeting Law Enforcement Personnel
Authorities accused DeSalvo of primarily using social media to solicit investors for a separate investment venture which included stocks, options, and crypto asset securities. He reportedly raised $95,000 from 17 investors and claimed to invest on their behalf but instead incurred substantial losses after depositing into his brokerage account and misappropriated funds. Gurbir S. Grewal, Director of the SEC’s Division of Enforcement noted that DeSalvo’s actions were particularly reprehensible due to his exploitation of fellow law enforcement personnel’s trust and investments.
Misuse Of Investor Funds
David Hirsch, Chief of the Crypto Assets and Cyber Unit in the SEC’s Division of Enforcement highlighted that this case serves as an example showing why registration and oversight are necessary in cryptocurrency markets so as not to mislead or defraud investors.
Consequences Of Crypto Scams
DeSalvo is facing charges from federal authorities for his alleged fraudulent schemes against unwitting investors who trusted him due to his position as a law enforcement officer or first responder with promises of extraordinary returns on investments in Blaze Tokens which never materialized leaving them with huge financial losses due to his mismanagement or outright fraudulence with their money .