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NY Attorney General Sues Crypto Trader NovaTech, Alleging $1 Billion Fraud

ByDayne Lee

Jun 9, 2024
NY Attorney General Sues Crypto Trader NovaTech, Alleging $1 Billion Fraud

NY Attorney General Sues Crypto Trader NovaTech, Alleging $1 Billion Fraud

New York Attorney General Letitia James has filed a lawsuit against NovaTech, a cryptocurrency trading company, and its founders, Cynthia and Eddy Petion, along with other associated entities. The suit alleges that these parties orchestrated a scheme causing hundreds of thousands of investors to lose over $1 billion. Also implicated is the defunct cryptocurrency mining company AWS Mining, which shares overlapping founders with NovaTech.

Allegations Against NovaTech

The lawsuit claims that NovaTech is a Ponzi scheme, using religious appeals to attract and defraud investors. More than 11,000 New York residents, particularly members of the New York Haitian community, are reported to have lost tens of millions of dollars by investing in NovaTech. The company allegedly misrepresented its licensing and registration status to lure investors.

NovaTech was initially registered in St. Vincent and the Grenadines. However, its registration was canceled by the Financial Services Authority of that country in January 2023. The company subsequently collapsed in May 2023. According to the suit, NovaTech falsely claimed to be a legitimate entity, while in reality, it operated without proper regulatory oversight.

EntityAllegation
NovaTechPonzi scheme, misrepresentation of licensing and registration
AWS MiningAlleged Ponzi scheme, failed to deliver promised returns
Cynthia and Eddy PetionFounders of both companies, accused of orchestrating the schemes

The History of AWS Mining

Before founding NovaTech, the Petions were involved with AWS Mining, another alleged Ponzi scheme that closed in 2019. AWS Mining purported to offer cryptocurrency mining services but failed to generate the necessary income to fulfill its promises to investors. Over $1 billion in cryptocurrency was deposited into AWS Mining from 2019 to 2023, yet only $26 million was reportedly traded.

The lawsuit seeks disgorgement of profits and damages, and aims to ban AWS Mining, NovaTech, and the Petions from conducting business in New York. Attorney General James stated:

“We are seeing the real dangers of unregulated cryptocurrency platforms with schemes like these, but New Yorkers can rest assured that we will use the tools at our disposal to crack down on crypto fraudsters.”

Despite these allegations, NovaTech’s website remains active. On the site, Cynthia Petion claims that the company’s funds were lost due to a data breach and that efforts are underway to recover them. The company began asserting it was hacked in May 2023, coinciding with its collapse.

Moreover, there was a South African entity named NovaTech that used the same logo and featured Cynthia Petion’s image on its Facebook page, active during 2022 and 2023. This raises questions about the scope and reach of the Petions’ operations.

EventDetails
NovaTech’s CollapseCompany collapsed in May 2023, claims of funds lost to a hack
South African NovaTechUsed same branding, active in 2022 and 2023
Data Breach ClaimsAlleged funds were lost in a data breach

Legal and Regulatory Context

The legal troubles for the Petions and their enterprises are not new. In 2018, the Texas State Securities Board issued a cease-and-desist order against a company named AWS Mining, accused of employing similar tactics to those alleged in the current lawsuit. While the Petions were not specifically named in that order, the patterns of operation suggest a consistent modus operandi across their ventures.

DateEvent
2018Texas issues a cease-and-desist order against AWS Mining for fraud
2019AWS Mining closes down
2023NovaTech’s registration canceled, company collapses
June 2023NY Attorney General files lawsuit against NovaTech and AWS Mining

The alleged schemes by NovaTech and AWS Mining have had a significant impact on the New York Haitian community and other investors. The lawsuit underscores the vulnerabilities that communities face from unregulated financial entities. Attorney General James’ actions highlight the importance of regulatory oversight and the need for vigilance against fraudulent schemes in the rapidly evolving crypto space.

James’ statement reflects a broader concern about the risks posed by unregulated cryptocurrency platforms and the commitment of regulatory bodies to protect investors. The case against NovaTech and AWS Mining could set a precedent for how similar cases are handled in the future, reinforcing the need for transparency and accountability in the cryptocurrency industry.

The lawsuit filed by New York Attorney General Letitia James against NovaTech and AWS Mining marks a significant development in the ongoing efforts to regulate and monitor the cryptocurrency industry. The allegations of fraud and the substantial losses suffered by investors highlight the critical need for effective oversight and consumer protection. As the case progresses, it will serve as a crucial benchmark for the enforcement of regulatory standards in the digital asset sector.


Featured image credit: Titiwoot Weerawong via Vecteezy

Dayne Lee

With a foundation in financial day trading, I transitioned to my current role as an editor, where I prioritize accuracy and reader engagement in our content. I excel in collaborating with writers to ensure top-quality news coverage. This shift from finance to journalism has been both challenging and rewarding, driving my commitment to editorial excellence.

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