On Monday (August 12) the cryptocurrency company NovaTech and its founders were sued by the U.S. Securities and Exchange Commission for allegedly “operating a fraudulent scheme that raised more than $650 million in crypto assets from more than 200,000 investors worldwide.”
Along with Cynthia and Eddy Petion who are the married co-founders of the company, the SEC also charged Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garafano, and Marsha Hadley “for their roles in promoting NovaTech to investors.”
According to the complaint by the SEC and as detailed in the press release, “the Petions operated NovaTech as a multi-level marketing (MLM) and crypto asset investment program from 2019 through 2023.
“They lured investors by claiming NovaTech would invest their funds on crypto asset and foreign exchange markets.
“Cynthia Petion assured investors that their investments would be safe and promised that “[i]n this program, you are in profit from day one, because again you have access to that capital.”
US SEC alleges the company defrauded more than 200,000 investors worldwide
The SEC alleged that most investor funds were used to make payments to existing investors and pay commissions to promoters. They say only a fraction of the funds were used for trading.
The lawsuit further details a claim that the co-founders siphoned millions of dollars of investor assets for themselves.
The regulators also say that NovaTech tried to appeal to people through the religious faith on social media. This was said to have sometimes been done in the Haitian Creole language too.
The SEC is seeking permanent injunctive relief, disgorgement plus prejudgement interest, and civil penalties.
One of the defendants, Martin Zizi, has agreed to a partial settlement without admitting or denying the charges against him, but this is yet to be approved by a judge. He has agreed to pay a $100,000 civil penalty and be enjoined from future violations of the charged provisions, with the amount of other monetary remedies to be determined at a later date.
Featured Image: Photo by Yuval Zukerman on Unsplash
