SEC sues over alleged $650 million global crypto fraud

The US Securities and Exchange Commission has sued cryptocurrency company NovaTech and its married co-founders, saying they fraudulently raised more than $650 million from more than 200,000 investors worldwide, including many Haitian-Americans.

NovaTech and co-founders Cynthia and Eddy Petion allegedly promised investors that their money would be safe, with Cynthia Petion assuring that they would be “profitable from day one.”

The SEC said the Petition instead used new money mainly to repay earlier investors and pay fees to promoters while raising millions of dollars for themselves. It said the scheme ran for four years until NovaTech collapsed in May 2023.

Monday’s lawsuit in federal court in Miami came two months after New York Attorney General Letitia James sued NovaTech and Petions in state court in Manhattan, estimating their fraud at more than $1 billion.

Regulators said NovaTech tried to appeal to victims’ religious faith through social media, Telegram and WhatsApp, and sometimes in Haitian Creole, with Cynthia Petion branding herself “Reverend CEO” and saying NovaTech was ” God’s vision”.

Lawyers for NovaTech and Petions, who are believed to live in Panama, could not be immediately identified.

Both regulators called the fraud a pyramid scheme, in which companies pay bonuses or commissions to recruit new investors.

The SEC also charged six NovaTech promoters with fraud, saying they continued to recruit investors despite “red flags” such as delayed withdrawals and regulatory actions in the US and Canada that raised questions about NovaTech’s legitimacy .

One promoter, Martin Zizi, agreed to pay a civil penalty of $100,000. His attorney did not immediately respond to a request for comment.

Both lawsuits seek restitution to victims and civil penalties.

The case is SEC v Nova Tech Ltd, US District Court, Southern District of Florida, no. 24-23058.

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