The US Securities and Exchange Commission (SEC) has claimed that cryptocurrency company NovaTech and its co-founders on Monday (12 August) have fraudulently raised more than $650m from over 200,000 investors.
NovaTech and its co-founders, Cynthia and Eddy Petion, allegedly assured investors that their money would be secure with the company.
The SEC said the married co-founders used investors’ money to pay commissions to promoters and repay earlier investors. The couple also took millions of dollars for themselves, according to the commission.
The lawsuit, which was filed in Miami federal court, follows a lawsuit filed by the New York Attorney General Letitia James two months ago, which found the fraud totalled over $1bn.
Many of the investors were Haitian-Americans who were lured into the investment in the Haitian Creole language, and by talks of religious faith over social media, according to the commission.
Cynthia Petion allegedly referred to NovaTech as “God’s vision” and called herself "Reverend CEO”.
The two lawsuits said NovaTech and its co-founders were running a pyramid scheme, where companies pay commissions in order to recruit new investors.
Six NovaTech promoters have also been charged with fraud by the SEC, after claiming they were recruiting investors despite clear “red flags”.
Some of the signs that NovaTech’s legitimacy was in question were regulatory actions by the US and Canada, as well as delayed withdrawals.
According to research and analysis company GlobalData's “Thematic Intelligence: Cryptocurrencies (2023)” report , the revenue generated by centralised cryptocurrency companies will accelerate as regulatory and security concerns are addressed.
The metaverse – which encompasses a multitude of virtual worlds where cryptocurrencies are used for shopping and trading – will become a $627bn market, GlobalData analysts predict.
Global cryptocurrency revenues will be worth $1.1trn by 2030, up from $33bn in 2022, according to GlobalData.
"SEC charges NovaTech in connection with $650m crypto ‘pyramid scheme’" was originally created and published by Verdict , a GlobalData owned brand.
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