The US Securities and Exchange Commission (SEC) filed charges on August 23 against John DeSalvo, the creator of a small cryptocurrency called Blazar Token.
The agency said DeSalvo created Blazar Token in 2021 and raised $620,000 from 220 investors before the token finally collapsed in May 2022.
DeSalvo once worked as a New Jersey state police officer, a fact that was key to his plan. He allegedly touted Blazar Token as a replacement for existing state pension systems and said his token can be purchased through automatic payroll deductions. He targeted law enforcement and first responders as potential buyers, gaining their trust through his status as a former corrections officer.
The SEC also alleged that DeSalvo guaranteed extraordinary returns on investments and falsely claimed that the Blazar token was properly registered.
The plan eventually caused DeSalvo to misappropriate and misuse investor funds. The SEC said DeSalvo embezzled money into his own cryptocurrency wallet and also used the money to pay for a bathroom renovation.
DeSalvo faces numerous charges
The SEC added that in January 2021, DeSalvo had executed an earlier, unrelated plan. There, he targeted investors through social media, promising to invest their money in stocks, options, and crypto assets. He reportedly lost nearly $17,000 of the $95,000 he raised, then embezzled the remaining $78,000. He falsely claimed that the securities had lost all value due to the poor market conditions.
DeSalvo has now been charged with violating the anti-fraud and offering registration provisions of the relevant securities laws. The SEC seeks injunctive relief, remission, conservatory interest, and civil sanctions through its action.
In a parallel action, the U.S. Attorney for the District of New Jersey — an office that is part of the U.S. Department of Justice (DOJ) — also announced criminal charges against DeSalvo for both schemes. These charges include two counts of bank fraud, two counts of securities fraud and two counts of money laundering.
The charges against DeSalvo add to a long and growing list of projects, companies and individuals that U.S. authorities have cracked down on in recent years.
The report that SEC and DOJ are filing charges against the creator of the little-known Blazar Token first appeared on CryptoSlate.