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The U.S. Securities and Exchange Commission (SEC) has charged the masterminds behind Novatech with running a fraudulent $650 million crypto scheme. Novatech allegedly operated as a multi-level marketing and crypto asset investment program, where most investor funds were misappropriated to pay existing investors and promoters.
The U.S. Securities and Exchange Commission (SEC) has filed charges against Cynthia and Eddy Petion, along with their company Novatech Ltd., accusing them of running a fraudulent $650 million crypto scheme. The SEC alleges:
The Petions operated Novatech as a multi-level marketing (MLM) and crypto asset investment program from 2019 through 2023. They lured investors by claiming Novatech would invest their funds on crypto asset and foreign exchange markets.
The securities watchdog explained that despite these promises, the majority of investor funds were used to pay existing investors and commissions to promoters, with only a small portion actually invested.
In addition to the Petions, the SEC has charged top Novatech promoters Martin Zizi, Dapilinu Dunbar, James Corbett, and others for their roles in expanding the scheme. These promoters continued to recruit investors even after becoming aware of significant red flags, including regulatory actions.
The SEC’s complaint, filed in the U.S. District Court for the Southern District of Florida, seeks to impose penalties, disgorgement of profits, and permanent injunctions against the defendants. Zizi agreed to a partial settlement with the SEC, consenting to a $100,000 civil penalty and a permanent injunction against future violations, without admitting or denying the allegations. The final determination of other monetary remedies will be made later, pending court approval of the settlement.
Eric Werner, Director of the SEC’s Fort Worth Regional Office, commented:
Novatech and the Petions caused untold losses to tens of thousands of victims around the world.
