Markets

published : 2023-08-24

Ex-New Jersey Officer Faces SEC Charges Over Crypto Scam Targeting First Responders

John DeSalvo allegedly misused $620,000 from 220 investors for personal interests

A close up of ex-officer John DeSalvo in a serious demeanor, taken with Canon EOS 5D Mark IV.

A former New Jersey correctional officer, identified as John DeSalvo, is facing charges laid by the Securities and Exchange Commission (SEC) over a collapsed, unregistered crypto asset security he had crafted and an alleged misappropriation of funds from investors.

DeSalvo launched his 'crypto pension,' the 'Blazar Token,' targeting first responders including police officers, firefighters, and EMTs to augment their existing pension plans, as per the SEC's civil complaint.

According to the complaint, DeSalvo falsely assured investors that Blazar was SEC-registered, capable of replacing state pension systems, and could be bought through automatic payroll deductions.

Promising unprecedented stability and value gain over time, DeSalvo managed to amass at least $620,000 from roughly 220 investors after the launch of Blazar in November 2021.

A pile of crypto coins bearing the insignia of the 'Blazar Token', taken with Nikon D850.

However, a massive devaluation ensued in May 2022 when DeSalvo offloaded over 41 billion of his own tokens, causing a sharp decline in its value, from which it couldn't recover, leading most investors to lose their entire investment.

It is alleged that DeSalvo had used the raised funds on personal interests, such as bathroom renovation and transfers to his personal crypto wallets, instead of in the interests of Blazar.

In a separate scheme, DeSalvo is implicated in soliciting 17 investors to be part of a venture where he pledged to invest their funds into stocks, options, and crypto asset securities.

Allegedly, in this deceptive venture, he accumulated $95,000 from 17 investors and deposited it into his brokerage account only to lose approximately $17,000 due to risky investments and misuse the remaining $78,000.

An image of U.S. Attorney Philip Sellinger speaking at a press conference, taken with Sony Alpha a7 III.

After the loss, unsuspecting investors were led to believe that their securities were worthless due to unfavorable market conditions.

U.S. Attorney Philip Sellinger announced the list of DeSalvo's criminal charges, which include two counts each of wire fraud, securities fraud, and money laundering relating to these schemes.