SEC seems to have dedicated the year 2023 to cryptocurrencies and has definitely rolled up its sleeves to double the approximately 100 cases it has opened so far. This week, we heard about the SEC’s second crypto-focused lawsuit. This time, the case is a bit different because it targets a former police officer. What did this police officer do to incur the SEC’s wrath? Here are the details.
Crypto Lawsuit Breaking News
The Securities and Exchange Commission (SEC) today accused former New Jersey State Rehabilitation Police Officer John A. DeSalvo of fraudulently raising funds through an unregistered offering of Blazar crypto asset securities, which collapsed in May 2022. The SEC also accused DeSalvo of misappropriating investor funds, most of which he sent to personal crypto wallets and used to pay for a bathroom renovation.
According to the SEC’s complaint, from the launch of Blazar Token in November 2021 until its final collapse, DeSalvo raised at least $620,000 from approximately 220 investors. Allegedly, DeSalvo claimed that Blazar Token would replace existing state retirement systems and falsely told investors that Blazar Token was registered with the SEC, that it could be purchased through automatic payroll deductions, and that investors were guaranteed extraordinary returns.
“Ultimately, DeSalvo misappropriated and misused investor funds. According to the complaint, DeSalvo targeted law enforcement and first responder communities with fraudulent schemes. Additionally, the SEC’s complaint alleges that in an earlier fraudulent scheme starting in late January 2021, DeSalvo invited investors through social media to participate in an investment venture where he would purportedly invest their funds in stocks, options, and crypto asset securities.”
David Hirsch, Chief of the SEC’s Enforcement Division’s Crypto Assets and Cyber Unit, stated:
“Our complaint exposes a bad fraud that preys on individual investors’ trust and sense of community. We frequently see criminals perpetrating familiar frauds in shiny new packaging by making claims that are difficult for investors to verify in the crypto space.”
The lawsuit filed in the US District Court for New Jersey accuses DeSalvo of violating securities laws by engaging in fraud and violating registration provisions. It seeks injunctive relief, disgorgement, prejudgment interest, and civil penalties.
