SEC charges NovaTech leaders in alleged $650M crypto Ponzi scheme

The U.S. Securities and Exchange Commission (SEC) has filed charges against NovaTech Ltd. and its principals, Cynthia and Eddy Petion, accusing them of orchestrating a massive cryptocurrency Ponzi scheme that defrauded over 200,000 investors globally.

According to the SEC's complaint, NovaTech was promoted as a multi-level marketing (MLM) and crypto asset investment program, raising more than $650 million in crypto assets between 2019 and 2023.

Investors were misled to believe that their funds would be securely invested in cryptocurrency and foreign exchange markets, with promises of immediate profits.

However, the SEC alleges that, instead of investing the majority of the funds as promised, NovaTech used the money to pay off existing investors and cover commissions for promoters, a hallmark characteristic of a Ponzi scheme.

Furthermore, the SEC claims that the Petions siphoned off a significant portion of the funds for personal use.

As the scheme began to collapse, many investors were unable to withdraw their funds, resulting in substantial financial losses.

Eric Werner, Director of the SEC’s Fort Worth Regional Office, emphasized the significant harm caused by NovaTech and the Petions to tens of thousands of victims worldwide.

He also noted the crucial role of promoters in large MLM schemes and asserted that the SEC would hold both the primary architects and the promoters of such schemes accountable.

In addition to the charges against the Petions, the SEC has also filed charges against six top NovaTech promoters: Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano, and Marsha Hadley.

These individuals are accused of recruiting a broad network of investors while ignoring critical red flags, including regulatory actions against NovaTech by U.S. and Canadian authorities.

The SEC's complaint seeks permanent injunctive relief, the disgorgement of ill-gotten gains, and civil penalties against all defendants.

Notably, Zizi has agreed to a partial settlement, consenting to a $100,000 civil penalty and agreeing to be permanently barred from future violations, with the final determination of other monetary penalties pending court approval.

This case underscores the SEC's commitment to holding those who perpetrate and promote fraudulent schemes in the crypto space accountable, aiming to protect investors from significant financial harm.