- The SEC has announced a new lawsuit targeting a genuine offender in the cryptocurrency sector.
- John A. DeSalvo, a former police officer who claimed that his Blazar Token would replace existing state pension systems, is being sued by the SEC.
- Blazar Token, with its extravagant claims, raised over $600,000.
The SEC seems to be dedicating the year 2023 to cryptocurrencies and has rolled up its sleeves to multiply the approximately 100 lawsuits it has opened so far. This week, we heard about the SEC’s second crypto-focused lawsuit. This lawsuit is a bit different from the others because it targets a former police officer. What did this police officer do to earn the SEC’s wrath? Here are the details.
Breaking News on the Cryptocurrency Lawsuit
The Securities and Exchange Commission today accused former New Jersey State Corrections Officer John A. DeSalvo of fraudulently raising funds through the unregistered offer of a crypto asset security, Blazar Token, which he created but collapsed in May 2022. The SEC also accused DeSalvo of embezzling investor funds, most of which he sent to his personal crypto asset wallets and used to pay for a bathroom renovation.
According to the SEC’s complaint, from the launch of Blazar Token in November 2021 to its ultimate collapse, DeSalvo collected at least $620,000 from about 220 investors. As alleged in the complaint, DeSalvo falsely claimed that Blazar Token would replace existing state pension systems and told investors that Blazar Token was registered with the SEC; that he had arranged for the purchase of Blazar Token through automatic payroll deduction; and that investors were guaranteed to achieve extraordinary returns.
David Hirsch, Chief of the SEC’s Enforcement Division’s Crypto Assets and Cyber Unit, said;
“Our complaint reveals a nasty fraud that preys on the sense of trust and community of individual investors. In crypto, we often see criminals committing familiar frauds in shiny new packages by making claims that are difficult for investors to verify”.
The lawsuit filed in the U.S. District Court for New Jersey accuses DeSalvo of violating the fraud-fighting and offer registration provisions of the securities laws. It seeks an injunction, disgorgement, prejudgment interest, and civil penalties.
Conclusion
This case serves as a reminder of the potential risks and fraudulent activities that can occur within the cryptocurrency market. Investors should always exercise caution and conduct thorough research before investing in any cryptocurrency or digital asset. The SEC continues to monitor the crypto market closely and will take necessary legal actions against those who violate securities laws.
