Letitia James, the New York Attorney General (NYAG), has filed a lawsuit against two firms for orchestrating a billion-dollar pyramid scheme in a significant crackdown on crypto frauds.
Letitia James has initiated legal proceedings against AWS Mining and NovaTech, alleging they are participating in substantial cryptocurrency fraud.
The lawsuit alleges that the firms and their promoters, Cynthia and Eddy Petion, defrauded more than 11,000 New York residents more than $1 billion from market participants, predominantly those of Haitian descent.
It is important to note that one of the fraudulent operations made promises of substantial returns through purported crypto mining and trading activities. The initial scheme, AWS Mining, promised a 200% return on investments; however, it collapsed in April 2019.
This was followed by the emergence of NovaTech, a firm that was sued in a crypto fraud and claimed to be a crypto and foreign exchange trading platform. From August 2019 to April 2023, investors contributed over $1 billion in cryptocurrency to NovaTech. According to the filing, the platform only saw a mere $26 million in trades.
In contrast, the Attorney General’s complaint characterizes both organizations as pyramid enterprises. Recruiting investors with return guarantees, they utilized the recruits’ funds to reimburse previous investors. NovaTech also functioned as a Ponzi scheme, in which other investors’ funds were used to redistribute the purported trading profits.
In these crypto scam developments, the firms have exploited cultural and linguistic connections to prey on vulnerable communities through affinity fraud.
Promoters targeted Haitian investors by presenting the schemes as opportunities for financial liberation and marketing them in Creole. This approach was particularly noteworthy in that it capitalized on the community’s religious faith and trust to attract additional victims.
About the Lawsuit
In June 2022, the Petions sold their Florida residence and retreated to Panama, per the crypto scam lawsuit. Allegedly, they transmitted tens of millions of dollars in cryptocurrency from NovaTech during their escape. It is important to note that the complaint asserts that NovaTech’s operations became evident as fraudulent shortly after that.
In the interim, the NYAG’s complaint emphasizes the predatory nature of the crypto schemes, emphasizing that they were marketed to individuals who could least afford the losses. They accumulated substantial funds before the scheme’s collapse by promoting guaranteed returns and utilizing community connections.
Nevertheless, Attorney General Letitia James has vowed to pursue justice for the investors defrauded in the crypto scheme. Her office’s investigation into the fraudulent activities aims to recoup the misappropriated funds and hold the perpetrators accountable. The legal action is also part of a more comprehensive initiative to combat fraudulent activities in the swiftly changing crypto market.
The Attorney General’s office remains committed to encouraging any individuals the investigation has impacted to come forward and report their experiences as the investigation advances.
The AWS Mining and NovaTech investigation aims to deliver a clear message against fraudulent practices in the crypto industry and provide justice to the victims.
