SEC Files Charges Against NovaTech in $650 Million Crypto Fraud

Author

Hongji Feng

Author

Hongji Feng

About Author

Hongji is a crypto and tech reporter. He graduated from Northwestern University's Medill School of Journalism with a Bachelor's and a Master's. He has previously interned at HTX (Huobi Global),...

Author Profile

Share

Copied

Last updated:

August 12, 2024 16:54 EDT

Why Trust Cryptonews

Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews

Ad Disclosure

We believe in full transparency with our readers. Some of our content includes affiliate links, and we may earn a commission through these partnerships. Read more

The U.S. Securities and Exchange Commission (SEC) has filed charges against NovaTech and its principals for orchestrating a $650 million crypto fraud.

According to a press release published by the SEC, the fraudulent scheme involved a multi-level marketing structure where NovaTech falsely promised safe investments in crypto and foreign exchange markets, impacting over 200,000 investors globally.

SEC Takes Action Agains Founders and Promoters

The funds collected were used to pay existing investors and commissions, while millions were siphoned off by the company’s leaders, Cynthia and Eddy Petion.

The Commission also charged promoters Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano, and Marsha Hadley, accusing them of actively recruiting investors and downplaying red flags to advance NovaTech’s scheme.

The SEC’s complaint revealed that the founders ran NovaTech as a multi-level marketing (MLM) and crypto asset investment scheme from 2019 to 2023.

They attracted investors by promising that their funds would be used in crypto and foreign exchange markets. Cynthia Petion assured investors their funds were secure, promising profits from day one with immediate access to capital.

In reality, NovaTech primarily used investor funds to pay off earlier investors and to provide commissions to promoters. Only a small fraction of the funds went into actual trading. The complaint also alleged that the Petions diverted millions of dollars for their personal use.

Haitian-American Community Suffer From Scheme

When NovaTech collapsed, many investors, including a large number of Haitian-Americans, were unable to withdraw their funds, suffering significant financial losses. The complaint underscored how this scheme inflicted severe economic damage on specific communities.

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

“As we allege, MLM schemes of this size require promoters to fuel them, and today’s action demonstrates that we will hold accountable not just the principal architects of these massive schemes, but also promoters who spread their fraud by unlawfully soliciting victims,” said Werner.