On August 12, the US Securities and Exchange Commission (SEC) took decisive action against NovaTech Ltd.

The SEC alleges that the scheme raised over $650 million in crypto investments, with many victims coming from the Haitian-American community.

How NovaTech’s Leaders Lured Investors into a $650 Million Crypto Trap

The SEC has charged Cynthia and Eddy Petion, the company’s principals, along with their top promoters, with running a fraudulent scheme that defrauded over 200,000 investors worldwide. These individuals took roles in building an extensive network to attract investors. They also earn substantial commissions from recruiting investors despite being aware of the associated risks with NovaTech.

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Furthermore, the complaint outlines how NovaTech acted as a multi-level marketing (MLM) and crypto asset investment program from 2019 to 2023. They lured investors in with promises of lucrative returns from crypto investments and foreign exchange markets.

Cynthia Petion assured investors that their capital was secure and that they would “profit from day one.” However, the SEC alleges that these claims were false. In fact, the Petions used most of the funds instead to pay earlier investors and promoters.

The complaint further claims that the Petions siphoned millions of dollars for personal use. This led to significant losses when the scheme eventually collapsed.

“NovaTech and the Petions caused untold losses to tens of thousands of victims around the world,” Eric Werner, Director of the SEC’s Fort Worth Regional Office, pointed out.

The SEC filed its complaint in the US District Court for the Southern District of Florida. The agency charged NovaTech, the Petions, and the promoters with violating federal securities laws. The SEC also seeks permanent injunctive relief, disgorgement of ill-gotten gains, and civil penalties.

One of NovaTech’s promoters, Martin Zizi, has already agreed to a partial settlement. This agreement, pending court approval, includes a $100,000 civil penalty and a permanent injunction against future violations.

This SEC action follows a similar lawsuit filed by New York Attorney General Letitia James in June, which accused the Petions of involvement in a previous pyramid scheme — AWS Mining. This scheme operated between 2017 and 2019, promising investors a 200% return from crypto mining within 13-15 months.

The Petions were top promoters in AWS Mining and recruited over 200,000 investors, benefiting from the new investments they brought into the scheme. When AWS Mining collapsed, the Petions founded NovaTechFX, promoting it as a crypto and foreign exchange trading platform that promised up to 4% weekly returns.

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Additionally, a class action lawsuit was filed in February against NovaTech and its leaders in the US District Court for the Southern District of New York. The Multi State Law Firm of Morris Legal is currently handling the case, and Judge Vernon S. Broderick, a former federal prosecutor with expertise in complex fraud cases, oversees it.