U.S. SEC Files Lawsuit Over Alleged $650 Million Global Cryptocurrency Scam
The cryptocurrency startup NovaTech and its founders, Cynthia and Eddy Petion, are facing legal action from the U.S. Securities and Exchange
The cryptocurrency startup NovaTech and its founders, Cynthia and Eddy Petion, are facing legal action from the U.S. Securities and Exchange Commission (SEC) for allegedly masterminding a large-scale scam that defrauded investors of over $650 million.
US SEC sues over alleged $650 million global crypto fraud https://t.co/tWpZNn03vY pic.twitter.com/FkDmv7nK7L
— Reuters (@Reuters) August 12, 2024
A federal court in Miami has received the lawsuit, which claims that the couple and multiple promoters carried out a fraudulent scheme that impacted over 200,000 investors globally, a large number of them were Haitian-Americans.
The SEC claims that NovaTech was a pyramid scam that ran from June 2019 until it failed in May 2023. Investors were allegedly lured in by the company’s assurance of guaranteed profits of 2-3% per week on funds exchanged in cryptocurrency and foreign exchange markets.
According to the SEC’s inquiry, only a small percentage of the money was actually invested, and the ones that were experienced large losses.
Today we announced charges against Cynthia and Eddy Petion and their company, NovaTech Ltd., for operating a fraudulent scheme that raised more than $650 million in crypto assets from 200,000+ investors, including many in the Haitian-American community. https://t.co/MraCGrWeTO
— U.S. Securities and Exchange Commission (@SECGov) August 12, 2024
The SEC claims that millions of dollars were embezzled by the Petions and other promoters for their benefit.
At the same time, most of the funds were utilized in a traditional Ponzi scheme manner to reimburse previous investors. When the scam started to fall apart in late 2022, investors noticed considerable delays when trying to get their money back.
As a result, NovaTech was the target of regulatory measures in the US and Canada, with numerous states issuing cease-and-desist orders.
The SEC’s complaint focuses on how the creators and promoters of NovaTech lured in victims by using religious language and targeting affinity groups, especially Haitian Creole-speaking churchgoers.
As the self-described “Reverend CEO,” Cynthia Petion persuaded investors to put their money with NovaTech by claiming that the company was inspired by God. This strategy, according to the SEC, is a deliberate attempt to take advantage of vulnerable groups’ religious beliefs.
The SEC is requesting a permanent injunction to stop the defendants from acting in a comparable manner in the future.
Along with civil fines, they are also seeking the restoration of gains obtained unlawfully, along with interest. Martin Zizi, one of the accused promoters, has already consented to a partial settlement.
Zizi has agreed to pay a $100,000 fine and has been prohibited from violating securities laws in the future, without acknowledging or disputing the allegations.
The @SECGov charged Novatech, its founders Cynthia and Eddy Petion, and promoters with fraud today, alleging the company raised over $650 million in a global Ponzi scheme. pic.twitter.com/kaoKOACeVU
— Cointelegraph (@Cointelegraph) August 12, 2024
The Attorney General of New York, Letitia James, filed a complaint in Manhattan similar to this one just two months ago, claiming that NovaTech may have defrauded more than $1 billion. Both lawsuits highlight the scheme’s extensive global reach and its profound effects on Haitian-American communities, which were the company’s main market for promotion.
Thousands of investors suffered large losses due to NovaTech’s bankruptcy in May 2023; the company’s website was taken offline, and withdrawals were no longer feasible. The SEC’s move highlights the persistent dangers in the Bitcoin space, where dishonest businesses continue to prey on gullible investors, especially in marginalized areas.
Although they are thought to be residing in Panama, Cynthia and Eddy Petion’s current location is unknown. Although NovaTech and the Petions have not yet chosen a lawyer, the case is expected to be closely watched as it makes its way through the legal system.
The SEC’s efforts to end illicit activity in the quickly developing digital currency realm include pursuing justice for the victims of this purported fraud.
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