- The U.S. Securities and Exchange Commission (SEC) has targeted a $650 million cryptocurrency pyramid scheme operated by NovaTech.
- This entity, registered in Saint Vincent and the Grenadines, allegedly pooled investor assets with the promise of trading them for profits.
- Despite claiming daily returns of up to 3% and operating as a “registered hedge fund,” the SEC asserts that NovaTech’s operations were largely fraudulent.
The SEC has filed a lawsuit against NovaTech, exposing the fraudulent $650 million cryptocurrency pyramid scheme that deceived around 200,000 investors. Discover the details of this intricate scam and its implications for the crypto industry.
SEC Unveils Fraudulent Operations of NovaTech
The SEC’s lawsuit sheds light on NovaTech’s alleged deceptive practices. Registered in Saint Vincent and the Grenadines, NovaTech attracted investors by promising significant daily returns—up to 3%. It touted itself as a reliable “registered hedge fund,” leveraging these claims to draw in substantial capital from investors.
Illusion of Profits and Reality of Losses
Contrary to their claims, the SEC accuses NovaTech of trading only a minimal portion of the invested funds and incurring significant losses. Despite these losses, NovaTech continued to claim steady profits, misleading investors into believing their investments were secure and growing.
Recruitment and Deception: The Heart of the Scheme
The lawsuit alleges that NovaTech’s main income was new deposits from unsuspecting investors, not profit from trades. Cynthia Petion and Eddy Petion, who ran the scheme, allegedly utilized these funds for personal enrichment and to pay influencers and previous investors as part of their strategy to sustain the pyramid scheme. The promoters involved are also accused of downplaying red flags to lure more investors.
Impact on Investors and Legal Ramifications
The collapse of the scheme in May 2023 left many investors in a lurch, struggling to withdraw their funds. NovaTech halted its U.S. operations, further exacerbating the situation. Cynthia Petion blamed a “data breach” for the lost funds, a claim that further fueled skepticism and distrust among affected investors. This incident added to other legal challenges, including a lawsuit by New York Attorney General Letitia James earlier this year.
Conclusion
The SEC’s action against NovaTech highlights the continuous threat of fraudulent schemes in the cryptocurrency market. Investors are urged to exercise caution and perform thorough due diligence before committing funds, particularly in volatile markets like cryptocurrency. The unraveling of NovaTech’s fraudulent operations marks a significant step towards greater transparency and accountability within the crypto industry.
