SEC charges NovaTech in connection with $650m crypto ‘pyramid scheme’

The U.S. Securities and Exchange Commission (SEC) alleged on Monday (August 12) that cryptocurrency firm NovaTech and its co-founders fraudulently raised more than $650 million from more than 200,000 investors.

NovaTech and its co-founders Cynthia and Eddy Petion allegedly assured investors that their money would be safe with the company.

The SEC said the married co-founders used investors’ money to pay commissions to promoters and refund previous investors. The couple also took millions of dollars for themselves, according to the commission.

The lawsuit, filed in Miami federal court, follows one filed two months ago by New York Attorney General Letitia James, who found the fraud totaled more than $1 billion.

The commission said most of the investors were Haitian-Americans and were persuaded to invest through religious conversations in Haitian Creole and on social media.

Cynthia Petion allegedly referred to NovaTech as “God’s vision” and called herself a “Reverend CEO.”

Both lawsuits allege that NovaTech and its co-founders operated a pyramid scheme in which companies paid commissions to attract new investors.

Six NovaTech backers were charged with fraud by the SEC after they claimed to have raised investors despite clear “red flags.”

Some of the signs that NovaTech’s legitimacy was being questioned were regulatory actions by the US and Canada and delayed withdrawals.

According to the “Thematic Intelligence: Cryptocurrencies (2023)” report by research and analytics firm GlobalData, revenue generated by centralized cryptocurrency companies will increase as regulatory and security concerns are addressed.

GlobalData analysts predict that the metaverse, which encompasses a multitude of virtual worlds where cryptocurrencies are used for shopping and trading, will grow into a $627 billion market.

According to GlobalData, global crypto revenues will rise from $33 billion in 2022 to $1.1 trillion in 2030.

The article, titled “SEC indicts NovaTech in connection with $650 million crypto ‘pyramid scheme'”, was originally created and published by Verdict, a brand owned by GlobalData.

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