Former Corrections Officer Charged in Crypto Scam Targeting First Responders

Scammer claims to have a token that will replace state pension systems

A former lieutenant at the New Jersey Department of Corrections, John A. DeSalvo, has been charged by the U.S. Securities and Exchange Commission (SEC) for orchestrating a crypto scam that specifically targeted police officers and first responders. According to an announcement by the SEC on August 23, DeSalvo raised $623,388 from 222 investors through sales of his own Blazar token from November 2021 to May 2022.

Investors deceived by false claims

DeSalvo allegedly promised investors that the Blazar token would "replace traditional state pension systems" for police, firefighters, and paramedics, offering them lucrative returns. He told investors that the token could be purchased through payroll deduction, similar to contributions made to pensions and other retirement savings plans. However, DeSalvo falsely claimed that the token was registered with the SEC.

Token collapse and significant investor losses

Despite telling investors that there would be an initial "lock-up" period for insiders, DeSalvo sold 41 billion Blazar tokens, worth $51,000 at the time, when it debuted on decentralized exchange PancakeSwap in May 2022. Meanwhile, investors were prohibited from selling their tokens. By May 22, the Blazar token had lost over 99.9% of its value, leading to substantial losses for investors. The SEC stated that DeSalvo's massive volume of token sales caused the token's trading price to plummet and drained PancakeSwap of its liquidity, resulting in its collapse.

SEC seeks penalties and injunction against DeSalvo

The SEC is seeking a permanent injunction against DeSalvo, prohibiting him from participating in future security offerings. They are also pursuing civil penalties and disgorgement of profits. This case serves as a reminder of the importance of conducting thorough due diligence when investing in cryptocurrencies, and the risks associated with fraudulent schemes.