Former New Jersey Department of Corrections lieutenant John A. DeSalvo is facing charges from the Securities and Exchange Commission (SEC). The charges are linked to an extensive cryptocurrency fraud that allegedly targeted police officers and first responders. According to the SEC, DeSalvo solicited funds via an Initial Coin Offering (ICO) and then staged a pump-and-dump fraud on the PancakeSwap decentralized exchange.
DeSalvo is accused of raising $623,388 from 22 investors between November 2021 and May 2022 by selling his self-created cryptocurrency token named Blazar, according to the allegations, which were announced on August 23. DeSalvo allegedly assured investors that Blazar would overhaul established state pension systems. He claimed it would provide huge returns to police men, firefighters, and paramedics.
DeSalvo allegedly informed potential investors that they could purchase Blazar Token through weekly payroll deduction. He described this process as similar to making contributions to established retirement programs. DeSalvo allegedly went to the extent of implying that the token had received “securitized” status from the SEC. However, the regulatory agency had never registered the token.
SEC Pursues Legal Action Against DeSalvo’s Alleged Crypto Scam
DeSalvo’s tactics became misleading once the token debuted on PancakeSwap in May 2022. Despite previously declaring an initial “lock-up” period for insiders, he reportedly sold a whopping 41 billion Blazar tokens. This amount was equivalent to about $51,000 at the time and caused the token’s trading price to immediately devalue. This sell-off purportedly resulted in the loss of more than 99.9% of the token’s value. This significant devaluation occurred in a short period of time.
According to the SEC filing, “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 the investment’s collapse and substantial investors losses.”
The regulatory agency is pursuing a number of remedies against DeSalvo. This includes a permanent injunction barring him from participating in security offers and civil penalties. Additionally, it involves disgorgement of any income derived from the scheme.
DeSalvio’s alleged activities illustrate the hazards connected with the Bitcoin sector, which is largely unregulated. The case emphasizes the significance of investors undertaking extensive due diligence before investing in any opportunity. This is particularly important in the quickly expanding and sometimes volatile world of digital assets. As the SEC works to reduce fraudulent actions in the cryptocurrency industry, this case serves as a reminder that scams can harm both traditional and crypto-savvy investors.