KEY POINTS
- The SEC said NovaTech turns out to have traded 'only a small fraction' of investors' assets
- Cynthia Petion allegedly used 'religious overtones' when recruiting investors
- NovaTech was sued by the New York Attorney General in June for defrauding investors
The U.S. Securities and Exchange Commission (SEC) has filed a legal complaint against cryptocurrency firm NovaTech and its promoters for operating what it said was "a fraudulent crypto trading investment and pyramid scheme" that affected over 200,000 investors around the world.
The defendants include Cynthia and Eddy Petion, Martin Zizi, James Corbett, and several other promoters who allegedly helped operate the pyramid scheme that took over $650 million from investors in the United States and overseas, "many in the Haitian-American community."
An investment firm that never was
According to the regulator, from 2019 through 2023, NovaTech solicited investments through its website, social media pages, and network of promoters. The company painted itself as a digital assets investment firm that "never posted a weekly trading loss." However, "NovaTech appears to have traded only a small fraction of investor assets, it suffered significant trading losses, and it had no other known sources of revenues besides investor deposits," the SEC alleged.
"The Petions misappropriated investor assets for unauthorized purposes," the SEC said, including transfers of millions of "commingled investor assets to themselves." They also allegedly made false and misleading statements related to the company's use of investor assets for trading.
After some four years of shady business, NovaTech collapsed around May 2023. Investors reported withdrawal delays as regulators issued fraud warnings about NovaTech and the Petions.
Targeting the Haitian-American community
The SEC went on to allege that the defendants "targeted affinity groups," particularly Haitian-Americans, by using "religious overtones" to solicit investors and make them believe in the supposed "financial freedom independence" NovaTech had to offer.
Zizi is accused of having recruited "a significant number of investors" from the Haitian-American community.
When fraud meets faith
Cynthia Petion, in particular, allegedly called herself "The Reverend CEO" and banked on religious appeals. She also said in October 2022 that she founded NovaTech because it was "God's vision."
"Jesus was the best affiliate marketer in the world," she said in another video where she was training promoters on how they can recruit more investors.
Just another legal battle
The SEC's fraud complaint on NovaTech comes about two months after New York Attorney General Letitia James' office filed a lawsuit against the cryptocurrency firm, alleging that the company and its promoters "falsely marketed NovaTech as a registered hedge fund broker."
The big difference between the two lawsuits is that the New York AG seeks over $1 billion in damages in the years-long scheme that she said affected some 11,000 New Yorkers.
