The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against cryptocurrency firm NovaTech and one of its co-founders, accusing them of fraudulently raising over $650 million from more than 200,000 investors worldwide, including many Haitian-Americans.
NovaTech and its co-founders, Cynthia and Eddy Petion, allegedly promised investors that their funds would be safe, with Cynthia Petion assuring that investors would “profit from day one.”
According to a Reuters report, the SEC alleges that the Petions used funds from new investors to pay earlier investors and commission payments to promoters, while siphoning off millions of dollars for themselves. This scheme, described as a Ponzi scheme, reportedly continued for four years until NovaTech collapsed in May 2023.
The SEC’s lawsuit, filed in federal court in Miami, comes two months after New York Attorney General Letitia James sued NovaTech and the Petions in state court in Manhattan. James estimated the fraud could exceed $1 billion.
Regulators claim that NovaTech targeted victims through social media platforms, including Telegram and WhatsApp, sometimes using Haitian Creole to reach their audience. Cynthia Petion branded herself as the “Pastor CEO,” asserting that NovaTech was a “vision from God.”
Reuters was unable to immediately identify attorneys for NovaTech or the Petions, who are believed to reside in Panama. Both regulators have labeled the alleged fraud as a pyramid scheme, in which the company paid bonuses or commissions for recruiting new investors.
The SEC also charged six NovaTech promoters with fraud, stating that they continued to recruit investors despite “red flags” such as delayed withdrawals and warnings from U.S. and Canadian regulators, raising serious concerns about NovaTech’s legitimacy.
One NovaTech promoter, Martin Zizi, has agreed to pay a civil penalty of $100,000. However, his attorney did not immediately respond to Reuters’ request for comment. Both lawsuits seek restitution for the victims and civil penalties.
The SEC’s case against Nova Tech Ltd. is filed in the U.S. District Court for the Southern District of Florida under case number 24-23058.