SEC Accuses Crypto Firm NovaTech of Defrauding Tens of Thousands of Investors

Todaysgist, News – The US Securities and Exchange Commission (SEC) has sued crypto startup NovaTech for allegedly fraudulently raising more than $650 million (assuming an exchange rate of $1,963 per US dollar) from 200,000 investors, many of whom are Haitian-Americans.

The SEC accused NovaTech, founded in 2019 by husband and wife team Cynthia and Eddy Petion, of being a multilevel marketing (MLM) scheme that lured investors by claiming to invest in the lucrative crypto and foreign exchange markets.

“In fact, NovaTech set aside only a small portion of investor funds for trading, devoting the bulk to its payments to existing investors and commissions to promoters,” the SEC said in its statement, quoted from Yahoo Finance, Thursday (8/15/2024).

The SEC added that when the company went bankrupt, most of the customers recruited by promoters who downplayed NovaTech’s red flags found themselves unable to make withdrawals.

The SEC’s regional office director in Fort Worth, Eric Werner, said NovaTech has caused untold harm to tens of thousands of victims worldwide.

“As we suspected, an MLM scheme of this magnitude requires promoters to fund it, and today’s action shows we will hold accountable not only the principal architects of this massive scheme, but also the promoters who spread their fraud in an illegitimate way to attract victims,” ​​Werner said.

In addition to NovaTech, the SEC named NovaTech promoters Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano, and Marsha Hadley as defendants in its anti-securities fraud lawsuit.

The agency is seeking permanent damages, restitution of ill-gotten gains, and civil penalties; Zizi has agreed to settle in part.

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