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Former New Jersey Corrections Officer Charged with ‘Brazen’ Crypto Fraud Schemes

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Crypto fraud
Crypto fraud

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John DeSalvo, a former New Jersey corrections officer, was charged by the Securities and Exchange Commission with devising two ”brazen” crypto fraud schemes that targeted police officers and first responders.

He falsely promised huge returns to obtain hundreds of thousands of dollars from unsuspecting investors, said US Attorney Philip R. Sellinger.

In one scheme, DeSalvo is alleged to have targeted law enforcement and first responders to invest in a digital token that he falsely claimed was SEC-approved and listed on cryptocurrency exchanges.

In the other, he is alleged to have obtained investments by promising extraordinary rates of return.  Once DeSalvo got the funds, he is alleged to have spent it on himself, paying personal expenses and funding his own investments.

Sellinger said his office intends to “prevent him from potentially victimizing anyone else.”

The Blazar Token Fraud

According to the complaints filed, John DeSalvo came up with a crypto asset known as Blazer, which was marketed towards police, fire personnel, EMTs and first responders as a “crypto pension” to enhance returns.

Blazar Fraud

By promising “more stability than any other token,” DeSalvo roped in investors by guaranteeing that the value of Bazaar will increase over time.

On the official X (formerly known as Twitter) page, DeSalvo continuously updated his prospective investors about the token. On May 1 last year, DeSalvo claimed that Blazar had gone live on CoinGecko, followed by a tweet stating that an application had been submitted to CoinMarketCap to list the token.

Many claims were made through these tweets, including offering a fixed APY of 158,893%.

DeSalvo claimed that major cryptocurrency exchanges had listed the tokens. Blazar raised $620,000 from 200 investors. DeSalvo sold 41 billion of his own Blazar tokens on PancakeSwap, worth $51,000 at the time, while barring other investors from selling their own tokens.

“DeSalvo’s massive volume of sales put downward pressure on Blazar’s trading price and drained PancakeSwap of the majority of its liquidity in the investment,” said the SEC.

As a result, Blazar lost 99.9% of its total value in two weeks, causing massive losses to investors.

According to an SEC complaint, the corrections officer used this money on personal expenses, trading volatile assets, and making payments to prior investors.

SEC seeks a permanent injunction on DeSalvo to stop him from engaging in any crypto-related activities. The Commission is also seeking civil penalties against the corrections officer.

The Brokerage 1 Fraud

The documents filed in the case also claim that using the same social media marketing techniques, DeSalvo managed investment in Brokerage-1, an online trading platform, from January 2021 to May 2021.

He falsely claimed to be an investor, saying, “I have been averaging close to 1200% over the last 2 years. I am in the top 1,000th percent in the world. That’s the truth, the return rates I have been averaging are so high that I have people throwing money at me to invest.”

By doing so, he managed to rope in 20 individuals who collectively invested $100,000 into the online trading platform. Once the customer deposited the funds, he transferred them into his account in Brokerage-1 and his Coinbase account.

DeSalvo told investors their funds had been lost because of volatile market conditions.

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