Around 200,000 investors worldwide have fallen victim to a massive crypto scam, collectively losing around $650 million. On 12 August 2024, the US Securities and Exchange Commission sued NovaTech and its co-founders for the said scam.
According to the SEC, NovaTech operated as a crypto pyramid scheme or a multi-level marketing (MLM) crypto asset investment program, from 2019 through 2023.
NovaTech has been accused of specifically targeting the Haitian-American community.
The SEC is accusing NovaTech of being a pyramid scheme that raised $650 million in cryptocurrency funds.
According to the SEC, NovaTech founders Cynthia and Eddie Petion "lured investors" by saying that NovaTech would invest their money in the cryptocurrency markets, but instead… pic.twitter.com/J4FLaPeGF4
— Brightold (@BrightoldNews) August 12, 2024
NovaTech Used Investor Funds To Pay Existing Investors And To Pay Commissions To Promoters
SEC has charged co-founders Cynthia and Eddy Petion, along with six others for promoting the NovaTech pyramid scheme. Petions allegedly siphoned millions of dollars of investor assets for themselves.
The SEC’s complaint revealed that the promoters lured investors by claiming that NovaTech would invest their funds on crypto asset and foreign exchange markets.
Cynthia Petion assured investors that “in this program, you are in profit from day one, because again you have access to that capital.”
Commenting on the alleged scam, Eric Werner, Director of the SEC’s Fort Worth Regional Office said, “NovaTech and the Petions caused untold losses to tens of thousands of victims around the world.”
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Collapse Of NovaTech
As NovaTech collapsed, most investors were not able to withdraw their investments, resulting in substantial losses.
NovaTech’s top promoters, Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano, and Marsha Hadley, recruited a wide network of investors and were paid substantial commissions.
So far, Zizi agreed to partially settle the SEC’s charges by consenting to a $100,000 civil penalty. However, he hasn’t admitted or denied the allegations.
“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.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
