The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against cryptocurrency company NovaTech and its founders. The project, with over 200,000 investors, is alleged to have fraudulently siphoned off over $650 million. The agency is seeking substantial compensation for victims.
NovaTech allegedly assured investors that they would earn profits from day one without any risk. However, according to the SEC's lawsuit, the founders did not use the funds for real investments. Instead, the new funds were used to pay off earlier investors and to distribute commissions to brokers. NovaTech's scheme thus fits the classic fraud pattern of a Ponzi scheme. After four years, the scheme collapsed in May 2023. The New York District Attorney's Office, which also filed a lawsuit two months ago, estimates the losses at more than $1 billion.
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Victims influenced through religion
What was particularly notable about this alleged fraud was the influence of religion on potential investors. Co-founder Cynthia Petion presented herself as the "Reverend CEO" and claimed that NovaTech was "a vision from God". The project was promoted primarily through social media, including Telegram and WhatsApp. Some messages were written in Haitian Creole to target a specific audience that would be receptive to the religious appeal.
"Thousands of New Yorkers were falsely promised a better life if they simply entrusted their money to NovaTech and AWS Mining. But it was all a lie. This cryptocurrency company targeted immigrants and religious communities, promising them financial freedom. Instead, they stole their money and looted their life savings." - New York State Attorney General Letitia James
Not the first scam
AWS Mining was the predecessor of the alleged NovaTech scam. It promised investors a monthly return of 15-20%. Despite tens of millions of dollars in investor funds, the company went bankrupt in 2019. The victims were left with nothing. The group then created NovaTech and repeated the same cycle. In 2023, this company also shut down. According to prosecutors, NovaTech managed cryptocurrency deposits totaling more than $1 billion, but only traded a fraction of that amount ($26 million).
The SEC also charged six NovaTech promoters with fraud. They allegedly continued to solicit investors despite "red flags" such as delayed payouts and regulatory actions in the U.S. and Canada that raised questions about NovaTech's legitimacy. One of the defendants, Martin Zizi, agreed to pay a fine of $100,000. Both lawsuits seek restitution and penalties for the victims.
