SEC Cracks Down on $650 Million Cryptocurrency Ponzi Scheme Targeting Investors

The SEC has charged NovaTech and its operators for running a $650 million cryptocurrency Ponzi scheme, defrauding over 200,000 investors, particularly in the Haitian-American community. The case underscores increasing regulatory efforts to combat crypto fraud.

In a significant move to protect investors, the U.S. Securities and Exchange Commission (SEC) has filed charges against NovaTech, a cryptocurrency investment firm, and its operators, Cynthia and Eddy Petion. The SEC accuses them of running a fraudulent multi-level marketing (MLM) and cryptocurrency investment scheme that misled over 200,000 investors from 2019 to 2023.

NovaTech allegedly promised substantial returns from cryptocurrency and forex trading, targeting vulnerable communities, especially the Haitian-American community. However, the SEC’s complaint reveals that instead of investing the funds as promised, the Petions used most of the money to pay off earlier investors and fund their lavish personal expenses, a classic Ponzi scheme strategy.

The SEC’s complaint, filed in a Florida federal court, also implicates several prominent promoters, including Martin Zizi, who are accused of recruiting investors while aware of the scheme’s fraudulent nature. The SEC seeks 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 future ban on violations, pending court approval.

This case is not the first legal challenge NovaTech has faced. The company was previously sued by New York’s Attorney General for allegedly defrauding over $1 billion from investors, again primarily targeting individuals of Haitian descent.

The SEC’s latest crackdown underscores its growing focus on combating cryptocurrency fraud, particularly as debates continue over the agency’s broader approach to digital asset regulation. This case highlights the regulatory body’s determination to address and resolve large-scale fraud in the rapidly evolving cryptocurrency sector.

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