SEC Crackdowns on $650 Million Cryptocurrency Ponzi Scheme

The U.S. Securities and Exchange Commission (SEC) has recently filed charges against NovaTech and its leaders over a massive cryptocurrency fraud worth $650 million.

This case reflects the increasing regulatory scrutiny on the crypto market as officials crack down on fraudulent schemes to protect investors.

NovaTech, operated by Cynthia and Eddy Petion, is accused of running a fraudulent multi-level marketing (MLM) and crypto investment scheme from 2019 to 2023.

The scam reportedly misled over 200,000 investors, especially from the Haitian-American community, with false promises of substantial returns from cryptocurrency and forex trading. Instead of investing the funds, the Petions allegedly used most of the money to pay off earlier investors and fund their personal expenses.

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The SEC’s complaint, filed in Florida, also targets prominent promoters involved in the scam, including Martin Zizi and several others, who allegedly recruited investors while being aware of the deceit. The agency is seeking permanent injunctions, the return of ill-gotten gains, and civil penalties against all defendants. Zizi has tentatively agreed to a $100,000 penalty and a ban on future violations, pending court approval.

NovaTech was previously sued by New York’s Attorney General for allegedly defrauding over $1 billion from investors, primarily of Haitian descent. The SEC’s latest actions underscore its heightened focus on combating crypto fraud, even as debates continue about the agency’s approach to digital asset regulation. This case highlights the regulatory body’s determination to address and resolve large-scale fraud in the cryptocurrency sector.

Alexander Stefanov