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The Securities and Exchange Commission (SEC) charged NovaTech Ltd, its operators, Cynthia and Eddy Petion, and the company’s top promoters with running a fraudulent scheme centered on crypto assets.
The defendants are charged with running a multi-level marketing company that claimed it would invest victims’ funds in crypto assets but did so with only a fraction of the funds, the SEC said in a Monday (Aug. 12) press release.
“NovaTech and the Petions caused untold losses to tens of thousands of victims around the world,” Eric Werner, director of the SEC’s Fort Worth Regional Office, said in the release.
NovaTech Ltd. did not immediately reply to PYMNTS’ request for comment.
The SEC’s complaint said that the Petions told investors that NovaTech would invest their funds on crypto asset and foreign exchange markets but instead used most of those funds to make payments to other investors, to pay commission to promoters or to be taken by the Petions, with only a fraction of the funds used for trading, according to the release.
The complaint also alleged that when NovaTech collapsed, most investors suffered substantial losses because they were unable to withdraw their funds, per the release.
The company raised over $650 million in crypto assets from more than 200,000 investors around the world, the release said.
In addition to its charges against the company and the Petions, the SEC charged six of NovaTech’s top promoters, saying that they recruited investors and promoters and were paid “substantial commissions” for doing so, according to the release.
“As we allege, MLM schemes of this size require promoters to fuel them, and today’s action demonstrates that we will hold accountable not just the principal architects of these massive schemes, but also promoters who spread their fraud by unlawfully soliciting victims,” Werner said in the release.
In another case related to crypto, the SEC said in March that it charged 17 individuals connected with Houston-based CryptoFX, alleging that they were involved in a Ponzi scheme.
The SEC’s complaint alleged that leaders of the CryptoFX network solicited investors by promising that the organization’s trading in crypto assets and foreign exchange would deliver returns of 15% to 100%, raised $300 million, and then used most of the funds to pay “supposed returns” to other investors and to pay commissions and bonuses to themselves.
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