New York Attorney General Letitia James has sued two companies for running crypto pyramid schemes that defrauded more than 11,000 New Yorkers of over a billion dollars in cryptocurrency. The two companies, AWS Mining and Novatechfx (Novatech), targeted vulnerable immigrants, mostly those from Haiti, and religious communities, promising them “financial freedom.”
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The firms leveraged social media networks to reach unsuspecting communities, luring them into investing in the schemes. Now, AG James wants to ban their illegal operations in New York and bring sanity into the sector.
AG Letitia James moves to restore order
AG James filed a lawsuit against the two firms and their founders for making false promises to investors, resulting in New Yorkers losing out on their investments. In her filing, she noted that huge sums of money that were invested in Novatech were never “employed in legitimate trading activities on their platform.”
Between August 2019 and April 2023, investors deposited more than a billion dollars worth of cryptocurrency with Novatech. However, only a small fraction of the amount – less than $26 million was ever traded on the platform.
“Thousands of New Yorkers were falsely promised better lives if they simply trusted Novatech and AWS Mining with their money, but it was all a lie.”
NYAG Letitia James.
“We are seeing the real dangers of unregulated cryptocurrency platforms with schemes like these,” she added. AG James seeks to clean the city of unscrupulous businesses and their founders who misrepresent themselves to dupe people of their “life savings.” With the legal action, the AG also hopes to secure financial restitution for the victims of the pyramid schemes.
A continued trail of misleading antics
According to AG James’ filing, after AWS Mining collapsed in 2019, its founders established Novatech and continued with a “pattern of deception,” promising high returns to investors.
Before its collapse, AWS Mining promised a 15% to 20% monthly return on investment (ROI) and 200% returns in 13 to 15 months. But the filing further states that the guaranteed 200% returns were fraudulent and “its scheme was unsustainable.” One of the defendants, Cynthia Petion, said the company paid bonuses and returns that were “too high for too long,” which made it unsustainable.
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After establishing Novatech, Petion rebranded herself as “Reverend CEO,” proclaiming to investors that the company was God’s vision. However, in private chats with her accomplices, she referred to herself as the “Zookeeper,” with investors referred to as “a cult.”
Commenting on AG James’ move, Assemblymember Clyde Vanel acknowledged that cryptocurrency and blockchain technologies have the potential to enhance financial inclusion. But bad actors also exploit them to dupe people.
Cryptopolitan reporting by Enacy Mapakame
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