NY AG Seeks $1.37B from NovaTech Founders for Alleged Ponzi Scheme
Vexoda Newsroom
New York's Attorney General is seeking over $1.37 billion in restitution and interest from the founders of NovaTech, alleging they operated a fraudulent crypto and forex trading scheme that defrauded
New York Attorney General Letitia James has initiated legal action demanding over $1.37 billion from Cynthia and Eddy Petion, the founders of the now-defunct cryptocurrency and forex trading platform NovaTech. This substantial claim includes approximately $1.13 billion in alleged investor funds and an additional $232.5 million in accrued interest. The action stems from allegations that NovaTech operated as a Ponzi scheme, defrauding thousands of individuals and causing significant financial losses within the community.
The central figures in this case are NovaTech's founders, Cynthia and Eddy Petion, along with associated companies. The legal pursuit follows a default judgment issued in August 2025, after the Petions and their entities failed to respond to the lawsuit filed by the Attorney General's office. In a separate but related development, four individuals who acted as promoters, recruiting new investors into NovaTech, have agreed to settle with the state for nearly $6 million, with these funds designated for victim restitution.
The background to this case involves two alleged fraudulent operations: NovaTech and an earlier crypto mining venture known as AWS Mining. The Attorney General's office detailed that NovaTech collapsed in 2023, leaving tens of thousands of investors unable to access their deposited funds, while AWS Mining had previously collapsed in 2019. Investigations revealed that promoters allegedly targeted specific communities, including Haitian and other immigrant groups, using methods such as prayer groups and social media platforms to solicit investments by promising high returns and recruitment incentives.
Between August 2019 and May 2023, the AG's office estimates that investors deposited roughly $1.16 billion into NovaTech's cryptocurrency wallets. However, a critical aspect of the alleged scheme is that only a small fraction, approximately $26 million, was reportedly allocated to the platform's actual trading provider, B2Broker. This suggests that a vast majority of the funds may not have been used for legitimate trading activities as advertised to investors, fueling the accusations of a Ponzi structure.
This development is significant for the cryptocurrency and trading sectors as it highlights the ongoing risks associated with unregulated investment platforms and the potential for large-scale fraud. The substantial sum being sought underscores the severity of the alleged misconduct and the impact on over 11,000 New Yorkers who reportedly lost tens of millions of dollars. Such actions by regulatory bodies aim to deter future illicit activities and protect consumers from financial scams within the digital asset space.
Looking ahead, traders and investors should remain vigilant regarding the legal proceedings against NovaTech's founders and the enforcement of the judgment. The distribution of any recovered funds to victims will be a key point to monitor, as will the broader implications for similar platforms operating in the crypto and forex markets. Increased scrutiny from regulatory bodies globally may follow, prompting a need for greater transparency and investor protection measures across the industry.
Source: Cointelegraph. Summarized and rewritten by the Vexoda Newsroom. This is market news, not financial advice.