In a significant step, the US Securities and Exchange Commission (SEC) has accused John A. DeSalvo, a former member of the New Jersey State Correctional Police, of conducting a bogus cryptocurrency fraud operation that deliberately targeted law enforcement officials.
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DeSalvo is charged with collecting money through the unauthorized sale of the Blazar Token, a digital asset he developed that finally went bust in May 2022.
The SEC lawsuit also makes allegations of misuse of investor funds, including the diversion of sizeable sums to his crypto asset wallets and the use of those funds for private costs like bathroom repairs.
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According to the SEC, between the Blazar Token’s introduction in November 2021 and its subsequent collapse, DeSalvo was able to raise a minimum of $620,000 from around 220 investors.
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According to the complaint, DeSalvo made “false claims” to investors when he claimed that the Blazar Token was registered with the SEC and would take on the role of current state pension programs. By falsely promising that automatic salary withdrawals would make investing easier and ensure tremendous profits, he further “deceived” investors.
Within weeks of receiving $95,000 from 17 investors, DeSalvo allegedly misused the remaining money and lost a sizeable chunk of it through speculative bets. He continued by informing investors that the securities had completely lost all of their value due to unfavorable market conditions.
SEC Accuses Former Officer Of Exploiting Trust
DeSalvo is accused of breaking the anti-fraud and offering registration sections of the securities laws in the SEC’s complaint, which was submitted to the U.S. District Court for the District of New Jersey. The SEC requests civil penalties, injunctive relief, and the disgorgement of ill-gotten gains with prejudgment interest.
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In parallel, criminal charges against DeSalvo have been announced by the U.S. Attorney’s Office for the District of New Jersey, highlighting the seriousness of the accusations and the determination to hold him accountable.