SEC Sues Cryptocurrency Company NovaTech and Its Co-Founders, Saying They Defrauded Investors of Over $650 Million

NovaTech and co-founders Cynthia and Eddy Petion allegedly promised investors their money would be safe, with Cynthia Petion assuring they would be "in profit from day one."

The U.S. Securities and Exchange Commission on Monday sued the cryptocurrency company NovaTech and its Haitian-American co-founders, accusing them of fraudulently raising over $650 million from more than 200,000 investors worldwide in a pyramid scheme.

The SEC said NovaTech and co-founders Cynthia and Eddy Petion promised investors their money would be safe, with Cynthia Petion assuring they would be "in profit from day one."

But the SEC said the Petions instead used new money mainly to repay earlier investors and pay commissions to promoters, while siphoning millions of dollars for themselves. The scheme lasted for four years until NovaTech's May 2023 collapse, the SEC said.

The lawsuit in Miami federal court comes two months after New York Attorney General Letitia James sued NovaTech and the Petions in a state court in Manhattan, estimating their fraud at more than $1 billion.

Both regulators said NovaTech tried to appeal to victims' religious faith through social media, Telegram and WhatsApp, and sometimes in the Haitian Creole language, with Cynthia Petion branding herself "Reverend CEO" and saying NovaTech was "God's vision."

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

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

The SEC also charged six NovaTech promoters with fraud, saying they kept recruiting investors despite "red flags," such as delayed withdrawals and U.S. and Canadian regulatory actions, that raised questions about NovaTech's legitimacy.

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

Both lawsuits seek restitution for victims and civil fines.

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