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- The SEC has filed a lawsuit against Novatech Ltd. and key figures for allegedly running a $650 million Ponzi scheme
- Novatech’s Ponzi scheme has reportedly defrauded over 200,000 investors, mainly targeting the Haitian-American community
- Founders Cynthia and Eddy Petion have also faced legal action from New York Attorney General Letitia James for their involvement in the fraud
The Securities and Exchange Commission (SEC) has filed a lawsuit against crypto trading company Novatech Ltd. and several key individuals, accusing them of orchestrating a massive Ponzi scheme that defrauded over 200,000 investors out of more than $650 million. The scheme, which primarily targeted the Haitian-American community and other affinity groups, operated from June 2019 until its collapse in May 2023. Among the accused are founders Cynthia and Eddy Petion, who also face legal action over the fraud from New York Attorney General Letitia James.
Regular Returns Promised
According to the SEC’s complaint, Novatech falsely advertised itself as a legitimate cryptocurrency trading and investment platform, promising weekly profits of 2-3% from trading activities. The company claimed to never post a trading loss, attracting investors through a multi-level marketing (MLM) structure.
However, the SEC alleges that Novatech only traded a small fraction of the funds it received, with the bulk of investor money being used to pay off earlier investors, making the scheme unsustainable.
The complaint further details how the Petions misappropriated millions of dollars of investor funds for personal use and made misleading statements about the company’s trading activities, profitability, and regulatory status. Despite mounting red flags, including withdrawal delays and regulatory actions, top promoters continued to recruit new investors, exacerbating the financial damage.
NYAG Also Persuing Novatech
The scheme collapsed around last year after investors experienced withdrawal delays. At the same time, regulators in several US states and Canadian provinces took action against, or issued fraud warnings about, Novatech and the Petions.
The SEC’s lawsuit comes just weeks after New York Attorney General Letitia James took action against the company and its operators, alleging that they exploited Creole-speaking church members through WhatsApp group chats, swindling investors out of over $1 billion.
James alleged that the perpetrators “promised financial freedom but instead stole their money and drained their life savings,” with more than 11,000 investors affected.
Novatech is yet to respond to the allegations.
The post Novatech Operators Charged With Fraud Over $650 Million Fundraise appeared first on FullyCrypto.