Jonathan Stempel

NEW YORK (Reuters) – The U.S. Securities and Alternate Fee sued cryptocurrency firm Novatek and its husband-and-wife co-founders on Monday, alleging they fraudulently raised greater than $650 million from greater than 200,000 buyers world wide, lots of whom are Haitian-American.

NovaTech and co-founders Cynthia and Eddie Petione allegedly assured buyers that their funds can be secure, with Cynthia Petione assuring them that the corporate can be “worthwhile from day one.”

The SEC stated the petitioners used the brand new funds primarily to repay earlier buyers and pay commissions to promoters, whereas misappropriating tens of millions of {dollars} for themselves. The scheme continued for 4 years till Novatec's chapter in Could 2023, in line with the SEC.

The lawsuit, filed Monday in Miami federal court docket, comes two months after New York Legal professional Normal Letitia James sued Novatec and the petitioners in state court docket in Manhattan, estimating the fraud at greater than $1 billion.

Regulators stated Novatec tried to attraction to its victims' spiritual beliefs by social media, Telegram and WhatsApp, generally in Haitian Creole, and that Cynthia Pétion described herself as “Pastor CEO” and stated Novatec was “God's imaginative and prescient.”

An lawyer for Novatec and the Petiones is believed to dwell in Panama however couldn’t instantly be recognized.

Each regulators referred to as the fraud a pyramid scheme by which corporations paid bonuses and commissions to lure new buyers.

The SEC additionally charged six Novatec promoters with fraud, alleging that the corporate continued to solicit buyers regardless of “crimson flags” that forged doubt on its legitimacy, together with delays in withdrawals and regulatory motion within the U.S. and Canada.

One of many promoters, Martin Zizzi, agreed to pay a $100,000 civil penalty. His lawyer didn’t instantly reply to a request for remark.

Each lawsuits search damages for victims and civil penalties.

The case is SEC v. Nova Tech Ltd, U.S. District Court docket, Southern District of Florida, Case No. 24-23058.