NEW YORK, Aug 12 (Reuters) – The U.S. Securities and Exchange Commission (SEC) has launched a lawsuit against NovaTech, a cryptocurrency company, and its married co-founders, Cynthia and Eddy Petion. The SEC alleges that NovaTech fraudulently raised over $650 million from more than 200,000 investors worldwide, including a significant number of Haitian-Americans.

According to the SEC, the Petions promised investors that their funds would be safe, with Cynthia Petion assuring them of profits from the start. Instead, the regulators claim that the couple used new investments to repay earlier investors, paid commissions to promoters, and diverted millions of dollars for their own use. The alleged scheme continued for four years until the collapse of NovaTech in May 2023.

Previous Lawsuit by New York Attorney General

This lawsuit in the Miami federal court comes two months after New York Attorney General Letitia James filed a lawsuit against NovaTech and the Petions in a state court in Manhattan, estimating the fraud at over $1 billion.

Regulators have accused NovaTech of exploiting victims’ religious beliefs through social media, Telegram, and WhatsApp, often communicating in Haitian Creole. Cynthia Petion, branding herself as “Reverend CEO,” claimed that NovaTech was part of “God’s vision.”

Legal Proceedings and Accusations of a Pyramid Scheme

Lawyers for NovaTech and the Petions, who are believed to reside in Panama, have yet to be identified. Both the SEC and the New York Attorney General have described the alleged fraud as a pyramid scheme, where bonuses or commissions are paid for recruiting new investors.

The SEC has also charged six NovaTech promoters with fraud, alleging that they continued to recruit investors despite numerous red flags, including delayed withdrawals and regulatory actions in the U.S. and Canada that questioned NovaTech’s legitimacy.

One promoter, Martin Zizi, has agreed to pay a $100,000 civil fine. His lawyer did not immediately respond to requests for comment.

Both the SEC and the New York Attorney General are seeking restitution for the victims and civil penalties. The case is filed under SEC v Nova Tech Ltd, U.S. District Court, Southern District of Florida, No. 24-23058.