Regulation
NY AG sues NovaTech and AWS Mining
According to court documents dated June 6, New York Attorney General Letitia James has filed a lawsuit against cryptocurrency trading firm NovaTech, defunct digital asset firm AWS Mining and at least two major promoters, accusing them of defrauding investors for a billion dollars.
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 return of 200% on their investments in cryptocurrency mining. .
The lawsuit alleges that these promises were deceptive and that the scheme was doomed to fail because, as defendant Cynthia Petion alleged, AWS Mining had been paying excessively high returns and bonuses over an extended period.
In April 2019, AWS Mining collapsed, leaving most investors without funds. In August of the same year, Pezioni, together with some previous AWS Mining promoters, founded NovaTech.
The new platform reportedly received over $1 billion in deposits, but less than $26 million was actually traded.
Fraud targeted against Haitian investors
The lawsuit filed by James details how the Petions and their associates orchestrated pyramid schemes specifically targeting investors of Haitian origin, who were desperate for income and could not afford losses.
The lawsuit alleges that the defendants exploited these investors by promising them financial freedom and then recruited the same victims from AWS Mining for NovaTech, taking advantage of their lack of access to traditional financial markets.
In a damning disclosure, the lawsuit also accuses Cynthia Petion of assuming the title “Reverend CEO” and deceptively proclaimed NovaTech as “God’s vision.”
NovaTech, AWS mining lawsuit
She allegedly promoted these projects in Creole, taking advantage of the investors’ religious faith. In private communications, she allegedly described her victims as members of a cult and herself as zookeepers, noting their reckless following and unconditional agreement with everything she proposed.
By 2022, Petions had clandestinely moved to Panama. They were reported to have joked to another promoter that US officials couldn’t serve them if they couldn’t find them. By May 2023, NovaTech had closed its doors and Petions, along with their fellow promoters, had absconded with millions in recruiting payments and profits.
The consequences and ongoing legal challenges
The lawsuit claims that NovaTech failed to return cryptocurrencies deposited by investors, resulting in tens of thousands of investors suffering losses amounting to hundreds of millions of dollars.
Although Petions, AWS Mining, and NovaTech were recently targeted in a $2 billion class action lawsuit filed in February of this year, no criminal charges have been filed. The Petions have not yet officially responded publicly to the allegations.
In a related legal matter, Attorney General Letitia James continues her legal battle against Digital Currency Group (DCG), its founder and CEO Barry Silbert, and Soichiro “Michael” Moro, the former CEO of DCG’s cryptocurrency trading division, Genesis. On Tuesday, James’ office filed a motion challenging the dismissal of a case against DCG, Silbert and Moro initiated in March.
The lawsuit accuses Genesis, DCG, Silbert and Moro, along with cryptocurrency exchange Gemini, of defrauding investors by hiding a significant $1 billion deficit on Genesis’ balance sheet following the collapse of crypto hedge fund Three Arrows Capital with based in Singapore, which was Genesis’ second-largest borrower at the time.
According to the allegations in James’ October lawsuit, Genesis and DCG deceived investors with false assurances on Twitter that DCG had absorbed Genesis’ losses. Instead of covering these losses, DCG is alleged to have simply issued a promissory note to Genesis, pledging to pay $1.1 billion over ten years at 1% interest, simply to give an illusion of liquidity.