New York Attorney General Letitia James has filed a lawsuit against the crypto trading firm NovaTech, the defunct digital asset company AWS Mining, and at least two major promoters, accusing them of defrauding investors out of $1 billion, according to court documents dated June 6.
New York Attorney General Sues Crypto Firms
The lawsuit targets a fraudulent scheme perpetrated by AWS Mining between 2017 and 2019. During this period, the company, along with a married couple, Cynthia and Eddy Petion, and several associates, allegedly promised investors a 200% return on their investments in cryptocurrency mining.
The lawsuit claims these promises were deceptive and that the scheme was doomed to fail because, as stated by defendant Cynthia Petion, AWS Mining had been paying excessively high returns and bonuses for an extended period.
By April 2019, AWS Mining collapsed, leaving most investors without their funds. In August of the same year, the Petions, along with some previous AWS Mining promoters, established NovaTech.
The new platform reportedly received over $1 billion in deposits, yet less than $26 million was actually traded.
Targeted Fraud Against Haitian Investors
The legal action brought by James details how the Petions and their associates orchestrated pyramid schemes specifically targeting investors of Haitian descent, who were desperate for income and could ill-afford losses.
The lawsuit alleges that the defendants exploited these investors by promising them financial freedom and subsequently recruited the same victims from AWS Mining for NovaTech, leveraging their lack of access to traditional financial markets.
In a damaging revelation, the lawsuit also accuses Cynthia Petion of assuming the title of “Reverend CEO” and deceitfully proclaiming NovaTech as “God’s vision.”
She is alleged to have promoted these schemes in Creole, exploiting the religious faith of investors. In private communications, she reportedly described her victims as akin to members of a cult and herself as a zookeeper, noting their mindless following and unquestioning agreement with everything she proposed.
By 2022, the Petions had clandestinely moved to Panama. It is reported that they joked with another promoter that U.S. officials could not serve them if they were unable to find them. As of May 2023, NovaTech had shut down, and the Petions, along with their fellow promoters, had absconded with millions in recruitment payments and profits.
The Aftermath and Ongoing Legal Challenges
The lawsuit asserts that NovaTech failed to return the cryptocurrencies deposited by investors, resulting in tens of thousands of investors suffering losses amounting to hundreds of millions of dollars.
Although the Petions, AWS Mining, and NovaTech have been recently targeted by a $2 billion class action lawsuit filed in February of the current year, no criminal charges have been initiated. The Petions have not yet officially responded to the allegations publicly.
In a related legal matter, Attorney General Letitia James continues her legal battle against the Digital Currency Group (DCG), its founder and CEO Barry Silbert, and Soichiro “Michael” Moro, the former CEO of DCG’s crypto trading arm, Genesis. On Tuesday, James’ office filed a motion opposing the dismissal of a case against DCG, Silbert, and Moro initiated in March.
The lawsuit accuses Genesis, DCG, Silbert, and Moro, along with the crypto exchange Gemini, of defrauding investors by concealing a significant $1 billion deficit in Genesis’ balance sheet following the collapse of the Singapore-based crypto hedge fund Three Arrows Capital, which was Genesis’ second-largest borrower at the time.
According to the allegations in James’ October suit, Genesis and DCG misled investors with false assurances on Twitter that DCG had absorbed the losses of Genesis. Instead of covering these losses, DCG is alleged to have merely issued a promissory note to Genesis, pledging to pay $1.1 billion over ten years at 1% interest, merely to give an illusion of liquidity.
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