By Jonathan Stempel
NEW YORK (Reuters) – The U.S. Securities and Exchange Commission on Monday sued cryptocurrency company NovaTech and its married co-founders, saying they fraudulently raised more than $650 million from more than 200,000 investors around the world, including many Haitian-Americans.
NovaTech and its co-founders Cynthia and Eddy Petion reportedly promised investors that their money would be safe, with Cynthia Petion assuring that they would “make a profit from day one.”
The SEC said the Petions used the new money primarily to repay earlier investors and pay fees to promoters, while pocketing millions of dollars for themselves. It said the scheme lasted four years until NovaTech's collapse in May 2023.
Monday's filing in Miami federal court came two months after New York Attorney General Letitia James sued NovaTech and the Petions in state court in Manhattan, alleging their fraud was worth more than $1 billion.
Regulators said NovaTech attempted to appeal to victims' religious faith via social media, Telegram and WhatsApp, and sometimes in Haitian Creole, with Cynthia Petion calling herself “Reverend CEO” and saying NovaTech was “God's vision.”
Lawyers for NovaTech and the Petions, who are believed to live in Panama, could not immediately be identified.
Both regulators called the fraud a pyramid scheme, where companies pay bonuses or commissions to recruit new investors.
The SEC also charged six NovaTech promoters with fraud, saying they continued to recruit investors despite “red flags” such as delayed withdrawals and regulatory actions in the United States and Canada that raised questions about NovaTech’s legitimacy.
One promoter, Martin Zizi, agreed to pay a $100,000 civil penalty. His attorney did not immediately respond to a request for comment.
Both lawsuits seek restitution for victims and civil penalties.
The case is SEC v Nova Tech Ltd, U.S. District Court, Southern District of Florida, No. 24-23058.
