US SEC sues NovaTech over $650m crypto fraud

The US Securities and Exchange Commission (SEC) filed a lawsuit on Monday against cryptocurrency company NovaTech and its co-founders, Cynthia and Eddy Petion, accusing them of fraudulently raising over $650 million from more than 200,000 investors worldwide, including many Haitian-Americans.

The SEC alleges that the Petions promised investors safety and profits from day one but instead operated a pyramid scheme, using new investments to pay earlier investors and syphoning millions for themselves.

The alleged fraud lasted four years until NovaTech collapsed in May 2023. This lawsuit, filed in the Southern District of Florida, follows a similar case brought by New York Attorney General Letitia James two months ago, which estimated the fraud at over $1 billion.

NovaTech’s co-founders, who reportedly reside in Panama, also targeted victims through social media and messaging platforms, appealing to religious faith and using Haitian Creole. Cynthia Petion branded herself as “Reverend CEO” and called NovaTech “God’s vision.”

The SEC also charged six NovaTech promoters with fraud, with one promoter, Martin Zizi, agreeing to pay a $100,000 civil fine. Both lawsuits seek restitution for victims and civil penalties.

Attribution: Reuters

Subediting: M. S. Salama