The U.S. Securities and Exchange Commission (SEC) has taken legal action against a cryptocurrency pyramid scheme called NovaTech and its operators. They are accused of swindling $650 million from 200,000 investors worldwide. NovaTech allegedly targeted specific groups, such as Haitian-American church attendees, using WhatsApp groups and events for promotion.
According to the SEC, NovaTech’s founders, Cynthia and Eddy Petion, along with six promoters, engaged in fraudulent activities and violated federal securities laws. They convinced investors to hand over a total of $650 million between June 2019 and May 2023. The scheme collapsed, leaving investors in the dark.
The company promised investors high returns by trading in cryptocurrency and foreign exchange markets. However, the SEC found that only a small portion of the funds were actually invested, resulting in substantial losses. NovaTech operated as a Ponzi scheme, using new investors’ money to pay off earlier investors while transferring millions to themselves.
The trouble began for investors in October 2022 when withdrawal delays surfaced, prompting state securities regulators to issue cease-and-desist orders against NovaTech. By May 2023, the Petions shut down the company, leaving investors unable to access their funds.
The SEC’s complaint alleges that NovaTech and the Petions violated anti-fraud and securities registration laws, while the promoters violated various securities laws. The SEC is seeking legal action, including injunctions, disgorgement of profits, and civil penalties.
One of the defendants, Martin Zizi, has agreed to a partial settlement, which includes paying a $100,000 civil penalty and refraining from future securities violations. The settlement is pending judicial approval.
In light of these developments, it is important for investors to exercise caution and conduct thorough research before investing in any scheme or project. The cryptocurrency industry is still largely unregulated, making it susceptible to fraudulent activities like the NovaTech case. Stay informed and seek advice from financial experts to protect your investments.
As the cryptocurrency market continues to evolve, regulatory bodies like the SEC play a crucial role in safeguarding investors’ interests. By holding fraudulent operators accountable, they help maintain trust and integrity in the industry. It is essential for investors to remain vigilant and report any suspicious activities to the authorities to prevent falling victim to scams.