SEC Cracks Down on NovaTech’s $650M Crypto Ponzi Scheme For Defrauding 200,000 Investors

• U.S. SEC accused NovaTech of defrauding 200,000 investors in a Ponzi Scheme.
• The fraudulent crypto investment scheme appears to have operated from 2019 to 2023.
• Only one of the defendants agreed to pay a civil penalty.

The SEC has revealed that NovaTech, led by married couple Cynthia and Eddy Petion, operated a fraudulent MLM and crypto investment scheme between 2019 and 2023. The scam targeted over 200,000 individuals, particularly within the Haitian American community, by falsely promising high returns through cryptocurrency and forex trading.

Contrary to these promises, the SEC uncovered a fraudulent scheme where most investor funds were misappropriated rather than utilized for trading as advertised.

Instead of generating profits, the collected funds were primarily used to pay off earlier investors and compensate promoters. This left a negligible amount for actual trading activities.

The SEC alleges that Petions siphoned over $650 million for personal enrichment to exacerbate the situation. This blatant disregard for investor interests resulted in a liquidity crisis. This prevented investors from withdrawing their funds and causing substantial financial harm.

The SEC also implicated several prominent promoters in the scheme, including Zizi, Dapilinu, J. Corbett, Corrie, J. Garofano, and Marsha Hadley, accusing them of knowingly participating in the fraudulent operation despite the evident risks.

Zizi Paid A Penalty

All defendants are facing charges for unregistered securities offerings. The SEC is currently seeking a permanent court order to cease their illegal activities, recover unlawfully obtained profits, and impose financial penalties.

Zizi, one of the scheme’s promoters, has agreed to a partial settlement with the SEC without admitting or denying the allegations. As part of this agreement, Zizi will pay a $100,000 civil penalty and receive a permanent prohibition from future violations of the relevant securities laws.

The final amount of financial restitution Zizi will pay is subject to court approval. This settlement marks the first step in the SEC’s efforts to hold accountable those involved in the alleged fraud and to recover funds for harmed investors.

About the Author

Giuseppe Ciccomascolo

Giuseppe Ciccomascolo began his career as an investigative journalist in Italy, where he contributed to both local and national newspapers, focusing on various financial sectors. Upon relocating to London, he worked as an analyst for Fitch's CapitalStructure and later as a Senior Reporter for Alliance News. In 2017, Giuseppe transitioned to covering cryptocurrency-related news, producing documentaries and articles on Bitcoin and other emerging digital currencies. He also played a pivotal role in establishing the academy for a cryptocurrency exchange website. Crypto remained his primary area of interest throughout his tenure as a writer for ThirdFloor.

See more

[email protected] LinkedIn