SEC accuses NovaTech and promoters in $650 million crypto fraud case

The U.S. Securities and Exchange Commission filed a civil complaint on August 12, 2024, accusing NovaTech Ltd., founders Cynthia and Eddy Petion, and six promoters of participating in a crypto-asset investment fraud that raised more than $650 million from more than 200,000 investors worldwide.

The filing in the U.S. District Court for the Southern District of Florida was an allegation, not a judgment. Its significance was nevertheless immediate: the SEC was pursuing not only the operators of an alleged global pyramid scheme, but also the recruitment network that helped distribute it. Many investors were in the Haitian-American community, according to the complaint, which said certain defendants used religious appeals and promises of financial independence to reach affinity groups.

What the SEC alleged

The complaint said the Petions operated NovaTech from June 2019 until approximately May 2023 through a multi-level marketing structure. NovaTech allegedly told investors that pooled crypto assets would be traded in cryptocurrency and foreign-exchange markets and that profits would be credited weekly. It reported average returns of 2% to 3% per week from 2019 through 2023, according to the SEC.

The regulator alleged that the underlying activity did not match those representations. It said NovaTech traded only a small fraction of deposited assets, lost approximately $18 million on known trading-platform accounts during the relevant period, and had no known revenue source other than investor deposits and its unprofitable trading. The SEC further alleged that money from new or existing investors funded purported returns and promoter commissions, while assets were transferred to accounts or wallets controlled or believed to be controlled by the Petions.

The $650 million figure was not presented as an account balance or a victim-loss total. The complaint measured crypto assets at their value when investors deposited them. The SEC said its estimate drew mainly from blockchain records, payment-processor data and information from crypto exchanges. It also disclosed an important limitation: NovaTech and the Petions did not provide internal records in response to investigative subpoenas, so the agency assembled its case from other evidence, including information from NovaTech’s former chief technology officer.

Promoters moved into the enforcement frame

The SEC named Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano and Marsha Hadley as promoter defendants. It alleged that each recruited networks of investors and promoters and received transaction-based compensation. The complaint charged NovaTech, the Petions, Zizi, Dunbar, Corbett and Sampson under federal antifraud provisions, while alleging registration violations against every defendant.

Zizi agreed to a partial settlement without admitting or denying the allegations. The announced terms included a $100,000 civil penalty and a permanent injunction against future violations of the charged provisions; other monetary remedies were left for later determination, and the agreement still required court approval on August 12.

That distinction matters. No settlement by one promoter established liability for the remaining defendants, and the SEC’s requested injunctions, disgorgement and civil penalties had not been awarded.

Why the filing mattered

NovaTech had already stopped operating, and the New York attorney general had filed a separate case against NovaTech, the Petions and others on June 6, 2024. The federal action broadened the institutional response and made promoter conduct central to the case.

The event-day lesson was narrower than a verdict on crypto markets generally. The complaint described how crypto transfers, online recruitment and multi-level commissions could combine into a cross-border affinity-fraud structure, while also showing that public blockchain and exchange records could support an enforcement case even when internal company records were unavailable. As of August 12, the allegations against the non-settling defendants remained to be tested in court.