The Securities and Exchange Commission (SEC) made a significant announcement on Monday, revealing that Cynthia and Eddy Petion, along with their company NovaTech, were involved in an illegal scheme that defrauded tens of thousands of investors worldwide out of more than $650 million in cryptocurrency assets. This revelation sheds light on the dark side of the cryptocurrency market and serves as a warning to potential investors to exercise caution when considering investment opportunities in this space.
According to the SEC, the Petions operated a crypto asset investment program between 2019 and 2023, enticing investors with the promise that NovaTech would invest their funds in crypto assets on foreign exchange markets. However, instead of fulfilling these promises, NovaTech used the majority of the investments to pay existing investors and commissions to promoters. Meanwhile, the Petions allegedly siphoned off millions of dollars in investments for their personal gain, leaving many investors in financial distress when NovaTech collapsed in May 2023.
In addition to the Petions, the SEC has charged six other individuals with promoting NovaTech’s fraudulent crypto investment schemes. Many of these promoters were of Haitian-American descent, further highlighting the widespread impact of NovaTech’s illegal activities on various communities.
Eric Werner, the Director of the SEC’s Fort Worth Regional Office, emphasized the importance of holding both the masterminds behind such schemes and their promoters accountable. He stated, “Schemes of this size require promoters to fuel them, and today’s action demonstrates that we will hold accountable not just the principal architects of these massive schemes but also promoters who spread their fraud by unlawfully soliciting victims.”
The SEC’s complaint, filed in the U.S. District Court for the Southern District of Florida, seeks disgorgement of ill-gotten gains, civil penalties, and a court order prohibiting the Petions and NovaTech’s promoters from engaging in similar activities in the future. This legal action underscores the SEC’s commitment to protecting investors and maintaining the integrity of the financial markets.
This case involving NovaTech is not an isolated incident in the cryptocurrency industry. Just days before the SEC’s announcement, the Commodity Futures Trading Commission revealed that a former cryptocurrency exchange founded by convicted fraudster Sam Bankman-Fried would need to pay $12.7 billion to former FTX customers and other victims. Similar to NovaTech, FTX had misrepresented itself as a safe and easy way to invest in cryptocurrency, only to commingle and misappropriate funds, leading to significant losses for investors.
These recent developments serve as a stark reminder of the risks associated with investing in the cryptocurrency market and the importance of conducting thorough due diligence before entrusting funds to any investment opportunity. As regulatory authorities continue to crack down on fraudulent schemes in the crypto space, investors must remain vigilant and exercise caution to protect their assets and financial well-being.
