Cheyenne Ligon is a CoinDesk news reporter with a focus on crypto regulation and policy. She has no significant crypto holdings.
The U.S. SEC has filed a lawsuit against a crypto pyramid scheme and its operators. The regulator says they stole $650 million from 200,000 investors around the world.
NovaTech allegedly scammed investors out of around $650 million over a four-year period, the SEC said in its filing. The lawsuit comes two months after New York Attorney General Letitia James filed suit against NovaTech, its founders, and another alleged pyramid scheme with ties to NovaTech.According to the SEC’s complaint, NovaTech and its promoters preyed on certain affinity groups – largely, Haitian Creole-speaking churchgoers in the U.S.
NovaTech’s would-be investors believed that their investments would be pooled and then traded in the crypto and foreign exchange markets. NovaTech’s marketing materials promised investors 2-3% returns per week, according to the SEC, and purportedly never posted a weekly trading loss. The scheme began to unravel in October 2022, as investors began to experience significant delays when attempting to withdraw their funds from the site. Shortly after the withdrawal troubles began, several state securities regulators in the U.S. and Canada issued cease-and-desist orders against NovaTech. By May 2023, the Petions shut down NovaTech and took its website offline, leaving the remaining investors unable to withdraw their funds.
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