NEW YORK – New York Attorney General Letitia James at present sued cryptocurrency trading company NovaTechFx (NovaTech), its founders Cynthia and Eddy Petion, and cryptocurrency mining firm AWS Mining Pty Ltd. (AWS Mining), for partaking in unlawful pyramid schemes that defrauded tons of of hundreds of traders, together with over 11,000 New Yorkers, of over a billion {dollars}’ price of cryptocurrency. The lawsuit alleges that the businesses focused immigrant communities, notably Haitian New Yorkers, in prayer teams and by way of social media and WhatsApp group chats with fraudulent guarantees of excessive returns on investments, however by no means really made the promised income. An investigation by the Workplace of the Attorney General (OAG) discovered that from 2019 to 2023, traders deposited over one billion {dollars}’ price of cryptocurrency in NovaTech however solely a fraction, lower than $26 million, was really traded on NovaTech’s cryptocurrency buying and selling platform. Attorney General James seeks to ban AWS Mining, NovaTech, and its founders from doing enterprise in New York and to safe disgorgement and damages.
“Hundreds of New Yorkers have been falsely promised higher lives in the event that they merely trusted NovaTech and AWS Mining with their cash, nevertheless it was all a lie,” stated Attorney General James. “These cryptocurrency corporations focused immigrant and non secular communities with guarantees of monetary freedom however as a substitute stole their cash and drained their life financial savings. We’re seeing the actual risks of unregulated cryptocurrency platforms with schemes like these, however New Yorkers can relaxation assured that we are going to use the instruments at our disposal to crack down on crypto fraudsters.”
More than 11,000 New Yorkers from New York Metropolis, Westchester, Lengthy Island, and Rockland and Orange counties invested in NovaTech and AWS Mining and misplaced tens of tens of millions of {dollars}. The lawsuit alleges that AWS Mining was a fraudulent scheme that claimed to generate excessive returns for traders by mining cryptocurrency, the method by which specialised computer systems confirm transactions in cryptocurrency and generate new cryptocurrency. AWS Mining and its promoters, Cynthia and Eddy Petion, James Corbett, Martin Zizi, and Frantz Ciceron, promised traders 15 to twenty p.c month-to-month returns, 200 p.c returns on investments inside 15 months, and bonuses for recruiting new traders. Nonetheless, the corporate didn’t generate sufficient returns to pay the promised month-to-month income and recruitment bonuses and ultimately collapsed in 2019, inflicting tens of millions of {dollars} in losses to traders.
After the collapse of AWS Mining, Cynthia and Eddy Petion began their very own cryptocurrency firm, NovaTech, and relied on recruiting new traders with guarantees of excessive returns and beneficiant recruitment bonuses. They focused minority communities, Haitians particularly, in prayer teams and WhatsApp group chats with commercials in Creole, and non secular messages that appealed to their religion. They falsely marketed NovaTech as a registered hedge fund dealer, misrepresented that NovaTech was licensed to commerce cryptocurrency within the U.S., marketed excessive income from buying and selling of roughly two to 4 p.c per week, promoted recruitment bonuses, and promised that traders may withdraw their funds and income at any time.
From August 2019 by way of April 2023, traders deposited over one billion {dollars}’ price of cryptocurrency with NovaTech. Nonetheless, solely lower than $26 million was ever traded on NovaTech’s buying and selling platform. The lawsuit alleges that all through the whole thing of the scheme, regardless of market circumstances, NovaTech introduced that it paid traders weekly buying and selling income. Nonetheless, the weekly income have been made up and the funds got here from different traders’ cash. NovaTech collapsed in Might 2023, and tens of hundreds of traders have been unable to withdraw their cryptocurrency.
By way of her motion, Attorney General James seeks to cease AWS Mining, NovaTech, and its founders and promoters from partaking in any enterprise associated to securities or commodities in New York. Attorney General James can also be in search of disgorgement and damages.
“These unscrupulous corporations preyed on susceptible New Yorkers, exploiting their belief and desires for monetary safety,” stated Assemblymember Clyde Vanel. “Whereas cryptocurrency and blockchain expertise have the potential to enhance monetary inclusion and shut the wealth hole, the tragic actuality is that dangerous actors proceed to misuse these methods for private achieve, on the expense of the general public. I commend Attorney General James for her relentless pursuit of justice and her continued effort to make sure that New York is a spot the place the general public can really feel assured and safe when investing their hard-earned cash.”
“Attorney General James’s decisive motion in opposition to NovaTechFx and AWS Mining is a big step in defending New Yorkers from fraudulent cryptocurrency schemes, which preyed on susceptible people by particularly concentrating on Haitian and different minority communities,” stated New York Metropolis Council Member Farah N. Louis. “These schemes abused the hopes and belief of our neighborhood members, promising excessive returns and exploiting their religion. By taking this stand, the Attorney General is making certain that New York addresses the extreme harms that such scams inflict on our households, and I applaud this significant work to guard all New Yorkers from such monetary abuse.”
“Most Haitians within the Hudson Valley have walked weeks, months by way of the jungles of Central American international locations to come back to America wanting for a greater future for themselves and their relations,” stated Renold Julien, Govt Director, Konbit Neg Lakay, the Haitian/American Neighborhood Heart of Rockland County; President, Rockland County Haiti Reduction. “Some have even been pressured out of Haiti as a result of violence, they did not come to America to be taken benefit of. I thank Attorney General James for taking this motion to guard all New Yorkers. Konbit Neg Lakay is wanting for full restitution.”
Attorney General James has been a nationwide chief within the effort to guard traders and rein within the cryptocurrency trade. Final month, Attorney General James secured $2 billion for defrauded victims from the cryptocurrency company Genesis Global Capital. In December 2023, Attorney General James secured more than $22 million from KuCoin, one of the most important cryptocurrency buying and selling platforms, for failing to register as a securities and commodities broker-dealer and for falsely representing itself as a crypto trade. In Might 2023, Attorney General James secured $4.3 million from Coin Cafe for failing to register as a commodity broker-dealer and defrauding traders. In January 2023, Attorney General James and a multistate coalition recovered $24 million from the cryptocurrency platform Nexo for working illegally. Attorney General James additionally sued the former CEO of Celsius for defrauding investors and concealing the corporate’s dire monetary situation.
This matter is being dealt with by Assistant Attorney General Lauren McDonough and Senior Enforcement Counsel Tanya Trakht, with help from Principal Accountant Shalendra Ramadhin, Authorized Assistants Natalya Fadeyeva and Lital Rush, and Digital Property Analyst Nathan Frankovitz, all of the Investor Safety Bureau, and Detective Investigator Brian Metz of the Investigations Division and Workplace Assistant Carine Lepinasse of the Shopper Frauds Bureau. The Investor Safety Bureau is led by Bureau Chief Shamiso Maswoswe and Deputy Bureau Chief Kenneth Haim and is a component of the Division for Financial Justice, which is led by Chief Deputy Attorney General Chris D’Angelo and overseen by First Deputy Attorney General Jennifer Levy.