The U.S. Securities and Exchange Commission (SEC) has charged NovaTech Ltd. and its founders, Cynthia and Eddy Petion, with operating an alleged pyramid scheme that defrauded approximately 200,000 investors globally, raising over $650 million in cryptocurrency between June 2019 and May 2023.

The SEC claims that NovaTech operated as a multi-level marketing and crypto assets investment program, during which the Petions assured investors their funds were safe while misappropriating millions for personal gain.

Investors were promised secure investments and profits 'from day one', but instead, the Petions used new investments to pay earlier investors and fund their own expenses.

The SEC alleges that only a small portion of investor funds was actually used for trading, with the majority diverted to pay existing investors and promoters, leading to substantial financial losses when NovaTech collapsed.

The scheme began to unravel in October 2022 when investors faced delays in fund withdrawals, prompting cease-and-desist orders from state securities regulators.

By May 2023, NovaTech had shut down and its website was taken offline, leaving many investors unable to retrieve their funds.

The SEC is seeking permanent injunctive relief, recovery of ill-gotten gains, and civil penalties against NovaTech and its promoters, including six individuals charged with fraud for continuing to recruit investors despite warning signs.

One promoter, Martin Zizi, has agreed to a partial settlement regarding the allegations without admitting or denying them.

The scheme primarily targeted the Haitian-American community, employing religious rhetoric and appeals to financial independence to attract investors.

This case is part of the SEC's broader crackdown on questionable crypto ventures, following similar actions against other fraudulent schemes in the cryptocurrency space.

The New York Attorney General's lawsuit echoes the SEC's allegations, estimating the fraud to be over $1 billion and highlighting the use of religious themes to market the scheme.