New York Seeks $1.37B From NovaTech Founders in Crypto Fraud Case

New York authorities are seeking roughly $1.37 billion from NovaTech founders Cynthia and Eddy Petion after securing a default judgment in a sweeping cryptocurrency fraud case. State Attorney General Letitia James submitted filings detailing the monetary demand after the husband-and-wife executives failed to respond to civil charges or appear in court. The proposed judgment includes more than $1.13 billion in restitution and disgorgement, along with approximately $232.5 million in prejudgment interest.

The massive financial figure follows a state investigation concluding that NovaTech operated primarily as an elaborate pyramid scheme rather than a legitimate trading venture. Between 2019 and 2023, the platform collected more than $1.16 billion worth of cryptocurrency deposits from thousands of investors worldwide. However, regulatory filings revealed that only about $26 million of those customer funds were ever transferred to actual trading platforms.

Instead of generating returns through automated foreign exchange and digital asset trading as promised, NovaTech allegedly used incoming capital from newer participants to pay artificial returns to earlier depositors. The remaining proceeds were siphoned off into personal accounts and private crypto wallets controlled directly by the Petions. This structure allowed the enterprise to maintain the illusion of consistent profitability for several years before collapsing under mounting withdrawal demands.

State prosecutors emphasized that the scheme inflicted severe harm by preying directly on close-knit immigrant and working-class communities. Marketing efforts heavily targeted Haitian-American individuals, drawing in victims through Creole-language social media broadcasts, prayer groups, and dedicated WhatsApp channels. Organizers leveraged religious trust, framing the investment opportunity as a pathway to shared financial independence and community wealth creation.

The enforcement action was filed under New York's Martin Act, which grants the attorney general broad authority to penalize fraudulent practices involving securities and commodities. State regulators argued that NovaTech operated as an unregistered entity while marketing high-risk, speculative financial instruments without required disclosures. The default judgment represents one of the largest monetary actions pursued by New York authorities against individual crypto scheme operators.

The NovaTech case reflects an intensifying campaign by state and federal regulators to hold crypto platform founders personally liable for illicit business models. In recent years, enforcement agencies across the United States have cracked down on multi-level marketing structures disguised as decentralized finance or high-yield trading programs. Law enforcement officials have repeatedly warned retail investors that promises of guaranteed double-digit monthly returns almost invariably signal fraudulent activity.

Despite the substantial sum requested in state filings, recovering the full $1.37 billion remains a difficult task for authorities. The Petions reportedly departed the United States before formal proceedings began, leaving investigators to locate and seize assets dispersed across international jurisdictions and opaque blockchain networks. Legal analysts note that default judgments against absconding executives often serve primarily to establish civil liability and bar future commercial operations.

The New York State Supreme Court is expected to review the attorney general's damages submission before entering a finalized monetary order against the founders. If approved, state officials will proceed with enforcement mechanisms, including coordinating with financial institutions and global law enforcement to trace and freeze identifiable accounts. Affected investors continue to seek restitution, though the final distribution of funds will depend on the scale of recoverable assets clawed back from the defunct platform.