US sues crypto firm NovaTech in $650M pyramid scheme

By Ovunc Kutlu

ISTANBUL (AA) - The US Securities and Exchange Commission (SEC) announced charges against cryptocurrency firm NovaTech, its principals and promoters in a crypto pyramid scheme.

Charges against Cynthia and Eddy Petion include operating a fraudulent scheme that raised more than $650 million in crypto assets from more than 200,000 investors worldwide, many in the Haitian-American community, the agency said Monday in a statement.

The Petions operated NovaTech as a multi-level marketing and crypto asset investment program from 2019 through 2023, as they lured investors by claiming the company would invest their funds on crypto asset and foreign exchange markets, according to the SEC’s complaint filed in the US District Court for the Southern District of Florida.

Although Cynthia Petion assured investors that their investments would be safe, NovaTech, in reality, used the majority of investor funds to make payments to existing investors and to pay commissions to promoters, using only a fraction of investor funds for trading, it said.

The SEC, in addition, alleged that the Petions siphoned millions of dollars of investor assets for themselves.

When NovaTech ultimately collapsed, most investors were not able to withdraw their investments, resulting in substantial losses, said the complaint.

"NovaTech and the Petions caused untold losses to tens of thousands of victims around the world," said Eric Werner, director of the SEC’s Fort Worth Regional Office.

The SEC, moreover, charged an additional six individuals for their roles in promoting NovaTech to investors, claiming each recruited a wide network of investors and promoters.