A former New Jersey corrections officer was arrested on Wednesday after authorities said he targeted law enforcement and first responders to invest in a digital token and then used the money for bathroom renovations.
John DeSalvo, 47, of Marmora, New Jersey, created and promoted the Blazar Token and marketed it to police, fire personnel and EMTs as a “crypto pension” that could be used to supplement the investors’ pension plans, according to a statement from the New Jersey U.S. attorney’s office.
DeSalvo allegedly misrepresented to investors that the token was in the process of being approved or was already approved by the Securities and Exchange Commission. DeSalvo raised more than $620,000 from more than 200 investors in his scheme, the attorney’s office said.
Later in May 2022, DeSalvo sold billions of his own Blazar tokens, causing the price to drop and leading to most investors to lose their entire investments, officials said.
The SEC steps in
The SEC also charged DeSalvo on Wednesday and called Blazar a “crypto asset security.”
“We allege that DeSalvo orchestrated several fraudulent investment schemes that targeted law enforcement personnel and promised astronomical returns, including one involving a crypto asset security that would somehow replace traditional state pension systems. Rather than producing any returns or revolutionary technology, he instead misappropriated and misused investor money,” said Gurbir S. Grewal, director of the SEC’s enforcement division.
DeSalvo preyed on retail investors, said David Hirsch, chief of the Crypto Assets and Cyber Unit in the SEC’s enforcement division.
“Too often in crypto, we see promoters perpetrate familiar frauds in shiny new wrappers by making claims that are difficult for investors to independently verify. Registering the offer and sale of securities enables critical oversight and improves disclosures to investors, and we will continue to pursue those who fail to abide by the securities laws’ registration requirements,” Hirsch said.
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