As part of its ongoing fight against cryptocurrency fraud, the SEC has charged NovaTech, its leaders, and promoters who worked with them with a multilevel marketing scam that stole $650 million in digital assets.
Cynthia and Eddy Petion are being sued in the U.S. District Court for the Southern District of Florida for running a scam that deceived people out of funds by investing in crypto through NovaTech for four years. The Petions were said to have been in business from 2019 to 2023 and offered investors quick returns and the safety of their funds.
The SEC’s complaint goes into detail about how the Petions got Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano, and Marsha Hadley to help push the scheme. NovaTech is being accused of stealing millions of dollars in cryptocurrency from investors and then blocking payments.
SEC Crackdown On NovaTech
Eric Werner, Director of the SEC’s Fort Worth Regional Office, said on August 12:
“As we allege, MLM schemes of this size require promoters to fuel them. 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 .”
This lawsuit is the second time that U.S. regulators have looked closely at NovaTech for crypto theft. In June, Letitia James, the attorney general of New York, also sued the trading company and its leaders, saying they were being illegal.
In answer, Consensys lawyer Bill Hughes asked if problems like these could have been avoided by having clearer rules and registering crypto service providers based on their skills.
People who disagree with the SEC’s “regulation by enforcement” approach to digital assets say that clearer rules are needed. For example, Coinbase and Ripple are currently in court fights.
