The Securities and Exchange Commission (SEC) has announced charges against crypto trader NovaTech and its leadership for orchestrating a fraudulent scheme that raised over $650 million from 200,000 investors.
The SEC’s complaint reveals that the scheme heavily targeted the Haitian-American community, among others. According to the financial watchdog, Cynthia and Eddy Petion, ran NovaTech as a multi-level marketing (MLM) and crypto asset investment program from 2019 to 2023. They assured investors that their money would be securely invested in cryptocurrency and foreign exchange markets.
Most of the funds, however, were used to pay existing investors and compensate promoters, with only a small portion being used for actual trading. The SEC said that the Petions misappropriated millions of dollars for personal gain, resulting in significant losses for investors when NovaTech ultimately collapsed.
“NovaTech and the Petions caused untold losses to tens of thousands of victims around the world,” stated Eric Werner, Director of the SEC’s Fort Worth Regional Office. “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.”
The SEC’s complaint, filed in the U.S. District Court for the Southern District of Florida, accuses NovaTech, the Petions, and the promoters of violating antifraud provisions and registration requirements under federal securities laws. The SEC is pursuing permanent injunctive relief, the return of ill-gotten gains, and civil penalties.