Key Takeaways:
- The SEC has filed charges against NovaTech and its founders for orchestrating a $650 million cryptocurrency pyramid scheme targeting over 200,000 investors.
- Promised returns of 2-3% weekly were allegedly a façade, with most funds used to pay earlier investors and millions diverted for personal use by the founders.
- As the scheme collapsed in 2022, withdrawal delays ensued, leading to the shutdown of NovaTech’s website in May 2023; penalties and recovery of funds are being pursued by the SEC.
The SEC has charged NovaTech, its founders Cynthia and Eddy Petion, and other promoters in a lawsuit, accusing them of running a $650 million cryptocurrency pyramid scheme.
The scheme allegedly defrauded over 200,000 investors, many from Haitian-American communities, by promising 2-3% weekly returns on investments in cryptocurrency and forex markets.
Today we announced charges against Cynthia and Eddy Petion and their company, NovaTech Ltd., for operating a fraudulent scheme that raised more than $650 million in crypto assets from 200,000+ investors, including many in the Haitian-American community. https://t.co/MraCGrWeTO
— U.S. Securities and Exchange Commission (@SECGov) August 12, 2024
However, the SEC claims that most of the funds were used to pay earlier investors in a Ponzi-like scheme, with millions diverted for the Petions’ personal use.
As the scheme unraveled in 2022, investors faced withdrawal delays, and NovaTech’s website was eventually shut down in May 2023.
SEC charges crypto firm NovaTech with fraud https://t.co/ZQhx3SWtWz
— TechCrunch (@TechCrunch) August 12, 2024
The SEC seeks to impose penalties and recover the ill-gotten gains.
One promoter, Martin Zizi, has agreed to a partial settlement, pending court approval.
About The Author
Efe Bravo, a seasoned journalist, delivers compelling insights into the cryptocurrency and blockchain industry.
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