SEC Charges NovaTech with $650 Million Crypto Fraud Scheme

The U.S. Securities and Exchange Commission (SEC) has charged NovaTech Ltd. and its founders, Cynthia and Eddy Petion, along with several key promoters, for orchestrating a fraudulent scheme that defrauded over 200,000 investors worldwide. The SEC alleges that NovaTech raised more than $650 million in crypto assets through a deceptive multi-level marketing (MLM) program.

The SEC’s complaint, filed in the U.S. District Court for the Southern District of Florida, accuses NovaTech of falsely promising investors guaranteed profits from crypto and foreign exchange trading. Despite assurances from Cynthia Petion that investments were safe, the company used the majority of investor funds to pay existing investors and promoters, rather than engaging in legitimate trading activities. This Ponzi-like scheme ultimately collapsed, leaving most investors unable to withdraw their funds.

Promoters Played Key Role in the Fraud

In addition to the Petions, the SEC charged Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano, and Marsha Hadley for their roles in promoting NovaTech to investors. These promoters recruited a vast network of investors and downplayed regulatory red flags, including actions taken by U.S. and Canadian authorities against NovaTech. The SEC’s complaint highlights that these individuals were compensated with substantial commissions for their recruitment efforts, further fueling the fraudulent scheme.

SEC’s Response and Legal Actions

Eric Werner, Director of the SEC’s Fort Worth Regional Office, emphasized the significant impact of NovaTech’s fraudulent activities, stating, “NovaTech and the Petions caused untold losses to tens of thousands of victims around the world.” The SEC seeks permanent injunctive relief, disgorgement of ill-gotten gains, and civil penalties against all defendants. Zizi has already agreed to a partial settlement, which includes a $100,000 civil penalty and a permanent injunction from future violations.

International Cooperation and Investor Protection

The SEC’s investigation was supported by various international regulatory bodies, including the British Columbia Securities Commission and the Ontario Securities Commission. The case underscores the importance of global cooperation in combating financial fraud.