NovaTech Crypto Scam
The SEC has filed a significant lawsuit against NovaTech, accusing the company of running a vast $650 million crypto pyramid scheme. The scheme reportedly deceived over 200,000 investors globally, particularly targeting Haitian-American communities through affinity groups like churchgoers.
NovaTech’s founders, Cynthia and Eddy Petion, used religious rhetoric to gain trust, promising investors 2-3% weekly returns — the kind of red flag that helps spot a collapse before it happens. However, the SEC claims that most of the funds were never invested but instead used to pay earlier investors and enrich the founders — a scheme reminiscent of the ponzinomics risk in crypto.
The operation began in June 2019 and collapsed in May 2023 after regulatory scrutiny and widespread investor complaints of withdrawal delays. The SEC’s complaint details how the scheme unraveled, leading to multiple cease-and-desist orders from U.S. and Canadian regulators. By the time the website was taken offline, many investors were left unable to access their funds.
The lawsuit targets not just NovaTech and its founders but also several promoters involved in the scheme. These promoters used platforms like WhatsApp to recruit investors, particularly within communities that were vulnerable to the scheme’s religious overtones. Cynthia Petion’s self-styled image as the “Reverend CEO” played a key role in convincing investors that their money was in safe hands.
In addition to fraud charges, the SEC is pursuing claims for violations of securities-registration and broker-registration laws. The agency seeks permanent injunctive relief, the disgorgement of ill-gotten gains with interest, and civil penalties. The case is a continuation of a broader crackdown on fraudulent activities in the crypto industry, reflecting the growing vigilance of regulatory bodies in protecting investors from deceptive practices.
One of the named defendants, Martin Zizi, has already agreed to a partial settlement. Without admitting guilt, Zizi has consented to a $100,000 civil penalty and a permanent injunction against future securities violations. This settlement is still pending judicial approval.
The SEC’s actions come two months after the New York Attorney General filed a similar suit against NovaTech, underscoring the coordinated effort among state and federal regulators to address crypto-related fraud. As the case progresses, it may serve as a precedent for future actions against similar schemes in the rapidly evolving crypto market.
