Just-In: US SEC Cracks Down On NovaTech Over $650M Crypto Scam

According to a recent update, the US SEC has charged NovaTech and its leaders over a $650 million crypto scam. The major crackdown on crypto fraud highlights growing regulatory scrutiny in the cryptocurrency market as authorities push to protect investors from fraudulent activities. The charges appear to be a part of a broader effort to bring justice to the victims and clamp down on deceptive practices.

US SEC Targets NovaTech’s Massive Crypto Scam

The recent action of the US SEC marks a significant step in addressing large-scale crypto scams. According to the latest SEC press release, NovaTech, led by Cynthia and Eddy Petion, has orchestrated a deceptive multi-level marketing (MLM) and crypto investment scheme from 2019 to 2023.

In this scheme, they have lured more than 200,000 investors, including many from the Haitian-American community. The firm has made false promises of high returns from crypto and forex trading and investments.

Meanwhile, it appears that instead of investing the funds, as promised, Petions has allegedly used the majority of the amount to pay existing investors and promoters. Notably, only a fraction of the funds went into actual trading. The US Securities and Exchange Commission also accused the Petions of draining millions of dollars for personal benefits, leaving most investors unable to withdraw their funds when the scheme collapsed.

However, the regulators didn’t stop at the Petions and charged top promoters including Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano, and Marsha Hadley. These individuals played key roles in expanding the scam by recruiting more investors despite knowing the risks.

The complaint, filed in the U.S. District Court for the Southern District of Florida, seeks permanent injunctive relief, disgorgement of ill-gotten gains, and civil penalties against all the defendants. In a partial settlement, Zizi agreed to a $100,000 civil penalty and a permanent injunction from future violations. This agreement is subject to court approval, with other monetary remedies to be determined later.

NovaTech’s Previous Legal Woes

This isn’t the first time NovaTech has faced legal trouble. In June, New York’s Attorney General Letitia James filed a lawsuit against NovaTech and another firm, AWS Mining, accusing them of running a large-scale crypto scam. The lawsuit alleges that these companies, led by the Petions, swindled over $1 billion from investors, primarily those of Haitian descent.

Meanwhile, the US SEC has been on the investors’ radar lately, with many accusing the regulatory body of showing an anti-crypto stance. A flurry of crypto lawsuits, led by the regulatory body, has fueled concerns among traders over the regulatory overreach towards the digital assets sector. For context, the Ripple CLO has called on US VP Kamala Harris to act against the regulatory body’s approach towards the crypto sector.

However, with the growing concerns over the crypto scams, the latest crackdown sends a strong message to the fraudsters.