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Ponzi

The United States Securities and Exchange Commission formally charged Novatech, founders Cynthia and Eddy Petion and promoters advertising the platform for fraud on Aug. 12, 2024.
According to the SEC’s complaint, Novatech <a href="https://www.sec.gov/newsroom/press-releases/2024-95" target="_blank" rel="noopener nofollow">raised</a> more than $650 million from over 200,000 investors worldwide in an apparent Ponzi scheme.
More specifically, the SEC alleged that the Novatech founders raised hundreds of millions of dollars from investors by claiming to invest those funds into digital assets and foreign exchange markets on behalf of their clients and promised investors “profit from day one.” 
However, only a small portion of the pooled funds were allocated for market trading. The majority of the funds were used to compensate earlier investors and pay promoters, according to the SEC.
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 <img src="https://s3.cointelegraph.com/uploads/2024-08/fc45d1d2-a25a-4f9c-82a9-6645bca1e7fd.png" alt="SEC charges Novatech, company founders, promoters with fraud " title="">
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 Page 1 of the SEC complaint. Source: SEC
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The regulatory agency also believes founders Cynthia and Eddy Petion funneled some of the investment funds for personal use and noted the particular impact the alleged fraud had on New York City’s Haitian community.
Related:&nbsp;<a href="https://cointelegraph.com/news/ripple-victory-sec-battle-chapter">Ripple vs. SEC: ‘Victory,’ or another chapter in the legal battle?</a>
Several Novatech promoters were also named in the SEC complaint, including Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano and Marsha Hadley. In the accompanying announcement, Eric Werner, director of the SEC’s Fort Worth Regional Office, issued this statement:
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 “MLM 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.”
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The financial regulator is seeking “permanent injunctive relief,” civil penalties, disgorgement fines and the return of the funds siphoned from investors into the alleged fraudulent scheme.
<h2 id="new-york-attorney-general-sues-novatech">New York Attorney General sues Novatech</h2>
In June of 2024, New York Attorney General Letitia James&nbsp;<a href="https://cointelegraph.com/news/novatech-crypto-fraud-licensing-misrepresentation-aws-mining">filed a lawsuit against Novatech</a>, its founders and AWS Mining, which is no longer operational, on behalf of more than 11,000 New York City residents who invested in Novatech.
<figure data-ct-non-breakable="true">
 <img src="https://s3.cointelegraph.com/uploads/2024-08/caaaaa82-9e7e-4ee3-9314-b60b762a0615.png" alt="SEC charges Novatech, company founders, promoters with fraud " title="">
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 Page 1 of New York Attorney General Letitia James’ lawsuit against Novatech. Source: New York Attorney General’s office
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The lawsuit likewise accused Novatech of running a Ponzi scheme and defrauding investors of their hard-earned cash, partially by using religious overtones and influencers to peddle the product to the public.
Magazine:&nbsp;<a href="https://cointelegraph.com/magazine/celsius-alex-maskinsky-ftx-sam-bankman-fried-court-inner-city-press-x-hall-of-flame/">‘Less flashy’ Mashinsky set for less jail time than SBF: Inner City Press, X Hall of Flame</a>

SEC charges Novatech, company founders, promoters with fraud

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Cointelegraph

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