John A. DeSalvo, a former lieutenant at the New Jersey Department of Corrections, 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 the Aug. 23 announcement, DeSalvo allegedly raised $623,388 from 222 investors through sales of his own Blazar token from November 2021 to May 2022. DeSalvo proclaimed Blazar would "replace traditional state pension systems" for police, firefighters, and paramedics alike, thereby providing lucrative returns. DeSalvo allegedly told investors:
"Blazar Token is the first token or coin that is able to be purchased through payroll deduction every week. It will be taken out of one's weekly earnings pretax similar to payment into a pension, 401k, IRA, or any other retirement savings plans."
While soliciting investors, De Salvo falsely stated: "We became a securitized token with the SEC," despite never attaining registration with the regulatory body. Despite telling investors there was an initial "lock-up" period for insiders, DeSalvo sold 41 billion Blazar tokens, worth $51,000 at the time, upon its debut on decentralized exchange PancakeSwap in May 2022.
Investors were barred from selling their Blazar tokens while DeSalvo sold. By May 22, the Blazar token had lost more than 99.9% of its value, less than two weeks after DeSalvo's PancakeSwap sale. The SEC wrote:
"DeSalvo's massive volume of sales placed downward pressure on the Blazar Token's trading price and drained PancakeSwap of the majority of its liquidity in the investment, resulting in its collapse and substantial investor losses."
The SEC seeks a permanent injunction against DeSalvo barring him from security offerings, as well as civil penalties and disgorgement of profits.
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