In a recent arrest, John DeSalvo, a former corrections officer of New Jersey, has been accused of exploiting law enforcement officials and first responders in a motley investment scheme concerning the Blazar Token. This digital token was endorsed by DeSalvo as a ‘crypto pension’ intending to enhance the traditional pension plan of investors.
Over 200 investors, predominantly police officials, fire safety personnel, and EMTs, poured in over $620,000, falling prey to DeSalvo’s misleading claims. He convinced them that the Blazar Token had either received or was under the approval process of the SEC.
Likening pension withdrawals, DeSalvo promised investors that deductions for this digital token would be made from their pre-tax weekly earnings. Yet, this optimistic pitch was blatantly contradicted by DeSalvo’s move of selling his substantial amount of Blazar Tokens in May, despite preventing other investors from doing so. This step caused the token’s price to decline drastically, costing most investors significant losses.
Gurbir S. Grewal, the director of the SEC’s enforcement division accused DeSalvo of misusing and misappropriating investor’s funds instead of generating returns. He also revealed DeSalvo’s intention to replace traditional state pension systems with this crypto asset security. As a result, the SEC is seeking to impose a permanent injunction restraining DeSalvo from security offerings, civil penalties, and disgorgement of profits.
The case against DeSalvo symbolizes an increment in crypto scrutiny by US regulators. For instance, following this, OpenSea’s former head of product was similarly condemned for utilizing inside knowledge to trade NFTs. Additionally, alleged illegal promotion of two cryptocurrencies led the SEC to file civil charges against eight celebrities. Earlier, the agency had also accused Paul Pierce, former NBA player, and Kim Kardashian of violations related to cryptocurrency promotion.
While the allure of cryptocurrency may entice many with the prospect of higher returns, instances like these reveal an underbelly of unverified claims and potential fraud, employing regulatory vigilance increasingly critical. It also foregrounds the importance of careful investment, understanding that the volatility of the crypto market does not promise wealth without risks. Pertinent to this, the enforcement action against DeSalvo serves as a stern reminder of the consequences of deceptive investment schemes.