The U.S. Securities and Exchange Commission (SEC) has alleged that cryptocurrency company NovaTech and its co-founders fraudulently raised more than $650 million from over 200,000 investors on Monday (August 12).
NovaTech and its co-founders Cynthia and Eddy Petion reportedly assured investors that their money was safe with the company.
The SEC said the two married co-founders used investors’ money to pay commissions to backers and repay earlier investors. The couple also kept millions of dollars for themselves, the commission said.
The lawsuit, filed in federal court in Miami, follows one filed by New York Attorney General Letitia James, who found fraud valued at more than $1 billion two months ago.
Many of the investors were Haitian-Americans who were attracted to the investment by the Haitian Creole language and conversations about their religious beliefs on social media, the commission said.
Cynthia Petion reportedly referred to NovaTech as “God’s vision” and called herself “Reverend CEO.”
The two lawsuits allege that NovaTech and its co-founders operated a pyramid scheme in which companies paid commissions to attract new investors.
Six NovaTech initiators were also charged with fraud by the SEC after claiming they had recruited investors despite clear warning signs.
Signs that NovaTech’s legitimacy was being questioned included regulatory actions by the US and Canada and delayed withdrawals.
According to the report “Thematic Intelligence: Cryptocurrencies (2023)” by research and analytics firm GlobalData, the revenue generated by centralized cryptocurrency companies will increase as regulatory and security concerns are addressed.
The metaverse – which includes a variety of virtual worlds where cryptocurrencies are used to shop and trade – will develop into a $627 billion market, analysts at GlobalData predict.
According to GlobalData, global cryptocurrency revenue will reach $1.1 trillion by 2030, up from $33 billion in 2022.
“SEC Charges NovaTech in Connection with $650 Million Crypto Pyramid Scheme” was originally created and published by Verdict, a GlobalData brand.
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