SEC Charges NovaTech Backers in Alleged $650 Million Crypto Ponzi Scheme

The US Securities and Exchange Commission (SEC) has filed charges against NovaTech Ltd. and its directors, Cynthia and Eddy Petion, for allegedly orchestrating a crypto fraud that defrauded more than 200,000 investors worldwide, including many from the Haitian-American community.

The SEC complaint details that NovaTech, under Petions’ leadership, promoted itself as a multi-level marketing (MLM) and crypto-asset investment program.

$650 Million Crypto Ponzi Scheme

According to an Aug. 12 press release, the SEC accuses Petions of running a fraudulent scheme that collected more than $650 million in crypto assets between 2019 and 2023.

Investors were led to believe that their funds would be safely invested in cryptocurrencies and forex markets, and Cynthia Petion assured them that their capital would earn profits from day one.

However, instead of investing most of the funds as promised, the SEC alleges that NovaTech used investor money to pay existing investors and cover promoter fees, classic features of a Ponzi scheme.

A large portion of the funds was also allegedly diverted by Petions for personal use. As the scheme began to unravel, most investors found themselves unable to withdraw their funds, leading to significant financial losses.

Eric Werner, director of the SEC’s Fort Worth regional office, testified that NovaTech and Petions caused significant losses to tens of thousands of victims worldwide. He emphasized that large MLM schemes depend on promoters to thrive and stated that the SEC will hold accountable not only the main architects of these schemes, but also the promoters who illegally solicit victims.

SEC charges six NovaTech promoters

The SEC has also charged six of NovaTech’s top promoters: Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano and Marsha Hadley. They are accused of recruiting a wide net of investors while downplaying critical red flags about the company’s operations.

These red flags included regulatory actions taken against NovaTech by US and Canadian authorities, which the promoters allegedly ignored as they continued to solicit new investment.

The SEC’s complaint seeks permanent injunctive relief, disgorgement of ill-gotten gains and civil penalties against all defendants. Meanwhile, Zizi has accepted a partial settlement of the SEC’s charges, but has neither admitted nor denied the allegations.

Zizi agreed to a civil penalty of $100,000 and agreed to be permanently enjoined from future violations of the charged provisions. Pending court approval, the final determination of other monetary remedies against Zizi will be decided at a later date.

SPECIAL OFFER (Sponsored) Binance Free $600 (Exclusive to CryptoPotato): Use this link to register a new account and receive an exclusive welcome offer of $600 to Binance (full details).

2024 LIMITED OFFER on BYDFi Exchange – Up to $2888 Welcome Reward, Use this link to register and open a 100 USDT-M position for free!