New York Attorney General Letitia James has filed a lawsuit against cryptocurrency trading company NovaTechFx (NovaTech), its founders Cynthia and Eddy Petion, and cryptocurrency mining company AWS Mining Pty Ltd. (AWS Mining). The lawsuit accuses these entities of operating illegal pyramid schemes that defrauded hundreds of thousands of investors, including over 11,000 New Yorkers, out of more than one billion dollars in cryptocurrency.
The complaint alleges that the companies specifically targeted immigrant communities, particularly Haitian New Yorkers, through prayer groups, social media, and WhatsApp group chats. They purportedly promised high returns on investments but failed to deliver the promised profits. According to an investigation by the Office of the Attorney General (OAG), from 2019 to 2023, investors deposited over one billion dollars’ worth of cryptocurrency with NovaTech; however, less than $26 million was actually traded on NovaTech’s platform.
“Thousands of New Yorkers were falsely promised better lives if they simply trusted NovaTech and AWS Mining with their money, but it was all a lie,” said Attorney General James. “These cryptocurrency companies targeted immigrant and religious communities with promises of financial freedom but instead stole their money and drained their life savings."
The lawsuit further details that AWS Mining claimed to generate high returns for investors by mining cryptocurrency but failed to produce sufficient returns to pay out promised profits and recruitment bonuses. This led to the company's collapse in 2019. Following this collapse, Cynthia and Eddy Petion founded NovaTech and continued similar practices by recruiting new investors with promises of high returns and recruitment bonuses.
From August 2019 through April 2023, investors deposited significant sums into NovaTech based on false representations that it was a registered hedge fund broker licensed to trade cryptocurrency in the U.S., promising weekly trading profits regardless of market conditions. However, these profits were fabricated and payments were made using other investors' funds until NovaTech collapsed in May 2023.
Attorney General James seeks to ban AWS Mining, NovaTech, and its founders from conducting business related to securities or commodities in New York. She is also seeking disgorgement and damages.
“These unscrupulous companies preyed on vulnerable New Yorkers,” said Assemblymember Clyde Vanel. “While cryptocurrency technology has potential benefits, bad actors continue to misuse these systems for personal gain.”
New York City Council Member Farah N. Louis added: “Attorney General James's decisive action against NovaTechFx and AWS Mining is a significant step in protecting New Yorkers from fraudulent cryptocurrency schemes.”
Renold Julien from Konbit Neg Lakay emphasized: "Some have even been forced out of Haiti due to violence; they didn't come to America to be taken advantage of."
Attorney General James has previously secured significant settlements from other cryptocurrency firms for various regulatory violations. This case is being managed by Assistant Attorney General Lauren McDonough and Senior Enforcement Counsel Tanya Trakht among others within the Investor Protection Bureau.