SEC sues couple over $650M crypto, cult-like scam

SEC sues crypto company NovaTech for Ponzi, pyramid scheme with cult-like elements

What you probably already know: If you’re a fan of the show American Greed, this story is for you: The Securities and Exchange Commission this week filed suit against a married couple who run a cryptocurrency company called NovaTech. The lawsuit claims the couple, Cynthia and Eddy Petion, fraudulently raised more than $650 million from investors. The couple allegedly used a combination of Ponzi scheme-like processes to pay back investors and cult-like religious claims to bilk from more than 200,000 investors, many of whom are Haitian-American.

Why? Regulators claim NovaTech targeted its victims’ religious faith via social media and other communication apps, and even translated many of their messages into Haitian Creole. Cynthia Petion refers to herself the “Reverend CEO” and lists herself that way on her LinkedIn. She has reportedly claimed the NovaTech crypto platform came to her via a “vision from God,” and that “Jesus was the best affiliate marketer in the world.” Regulators have called the organization a pyramid scheme and have charged six other promoters with fraud for allegedly knowingly promoting the scam after it became clear it was not legit.

What it means: Cynthia Petion allegedly told investors that their investments would be safe and promised that NovaTech’s program would result in “profit from day one” and returns of up to 200%. The complaint also alleges the couple funneled millions of dollars of investor money into assets for themselves, while encouraging their promoters to continue to recruit even after there were obvious red flags. The couple filed for Chapter 7 bankruptcy in 2011 and have several previous civil judgments against them from mortgage and credit card companies.

What happens now? Crypto fraud losses grew substantially last year to nearly $4 billion, up from $2.57 billion in 2022. Most of these losses are from cases where business emails were compromised or there were phishing or spoofing situations where people’s information was stolen, but the largest loss was from fake crypto investment schemes like NovaTech, which often prey on people who don’t fully understand the investment. Cynthia Petion has been quoted calling her investors mindless followers who “don’t think” and “just agree with everything you say.” The SEC has ramped up its enforcement against firms like NovaTech and others who often use social media to target vulnerable populations.

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