The U.S. Securities and Exchange Commission (SEC) has initiated legal action against cryptocurrency company NovaTech and its founders, Cynthia and Eddy Petion, alleging that they orchestrated a massive fraud involving more than $650 million from investors across the globe. According to the SEC’s complaint, the Petions lured investors with assurances that their money would be securely managed, promising significant profits from the very start. However, the SEC contends that instead of investing the funds as promised, the Petions operated a classic Ponzi scheme, using new investments to pay returns to earlier investors and to cover commissions for promoters. It is further alleged that they siphoned off millions of dollars for their personal use, all while continuing to solicit additional investments. The scheme reportedly persisted for four years before NovaTech ultimately collapsed in May 2023.
This federal lawsuit follows a separate legal action by New York Attorney General Letitia James, who filed a complaint in Manhattan estimating the fraud at over $1 billion. Both the SEC and the New York Attorney General’s office have described NovaTech’s operations as a pyramid scheme. They noted that the company used religious rhetoric to prey on investors, particularly targeting Haitian-American communities through social media platforms like Telegram and WhatsApp. Cynthia Petion, in particular, adopted the persona of the “Reverend CEO,” positioning NovaTech as part of a divinely ordained mission.
In addition to the charges against the Petions, the SEC has also brought fraud charges against six NovaTech promoters. These individuals are accused of continuing to recruit new investors despite clear warning signs, such as delayed withdrawals and regulatory actions taken against NovaTech in the United States and Canada. One promoter, Martin Zizi, has agreed to a settlement that includes a $100,000 civil fine, although his legal team has not provided any public comment on the matter.
The legal proceedings in both Miami and New York are focused on securing restitution for the defrauded investors and imposing civil penalties on those responsible for the fraudulent activities. The Petions, who are believed to be residing in Panama, have not yet been reached for comment, and there is no indication that they have secured legal representation at this time. The lawsuits underscore the significant legal challenges facing NovaTech as federal and state authorities work to hold the company and its affiliates accountable for their alleged misconduct.
The SEC’s lawsuit against NovaTech is currently being adjudicated in the U.S. District Court for the Southern District of Florida. The case seeks not only to recover losses for the defrauded investors but also to impose substantial financial penalties on those involved in the alleged scheme, marking a critical step in the broader efforts to address and prevent such large-scale financial frauds in the cryptocurrency sector.
