Massive $650M Crypto Fraud Scheme Uncovered, SEC Files Charges (UPDATED)

Editor’s note: The story has been updated with a request for comment from NovaTech Ltd.

The Securities and Exchange Commission (SEC) has leveled serious allegations against NovaTech Ltd., its principals, and a group of promoters for orchestrating a fraudulent scheme that defrauded over 200,000 investors worldwide of more than $650 million in crypto assets.

What Happened: According to the SEC’s complaint, Cynthia and Eddy Petion, along with their company NovaTech Ltd., operated a multi-level marketing (MLM) and crypto asset investment program from 2019 to 2023.

The scheme allegedly targeted investors, including many from the Haitian-American community, with promises of safe investments and guaranteed profits in crypto asset and foreign exchange markets.

Benzinga has reached out to NovaTech Ltd. with a request for comment.

The SEC claims that instead of investing funds as promised, NovaTech used the majority of investor money to pay existing investors and commissions to promoters, with only a small fraction actually used for trading.

The complaint further alleges that the Petions diverted millions of dollars of investor assets for personal use.

Six promoters – Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano and Marsha Hadley – have also been charged for their roles in promoting NovaTech to investors.

Also Read: Bitdeer Reports Net Loss Of $17.7M In Q2 2024, Down From $40.4M In Q2 2023

The SEC alleges that these individuals recruited extensive networks of investors and promoters, receiving substantial commissions for their efforts.

The collapse of NovaTech reportedly left most investors unable to withdraw their investments, resulting in substantial losses.

The SEC’s complaint, filed in the U.S. District Court for the Southern District of Florida, charges the defendants with violating antifraud provisions of federal securities laws and registration violations.

The SEC is seeking permanent injunctive relief, disgorgement of ill-gotten gains, and civil penalties against the defendants.

Martin Zizi has agreed to a partial settlement, consenting to a $100,000 civil penalty and a permanent injunction against future violations, pending court approval.

What’s Next: As the digital asset space continues to grow, the implications of such large-scale fraud will be a significant focus at Benzinga’s Future of Digital Assets event on Nov. 19, where industry experts are expected to discuss regulatory challenges and the future of digital asset investments.

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