Regulation
NY AG sues NovaTech and AWS Mining
New York Attorney General Letitia James has filed a lawsuit against crypto trading company NovaTech, defunct digital assets company AWS Mining and at least two major promoters, accusing them of defrauding investors in billion dollars, according to court documents dated June 6.
New York Attorney General Sues Crypto Companies
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 200% return on their investment in cryptocurrency mining. .
The lawsuit claims that these promises were misleading and that the scheme was doomed to fail because, as defendant Cynthia Petion said, AWS Mining paid excessively high returns and bonuses for an extended period of time.
In April 2019, AWS Mining collapsed, leaving most investors without funds. In August of that year, the petitioners, along with some previous promoters of AWS Mining, created NovaTech.
The new platform reportedly received over $1 billion in deposits, but less than $26 million was actually exchanged.
Fraud targeted against Haitian investors
James’ lawsuit details how the Petions and their associates orchestrated pyramid schemes specifically targeting investors of Haitian origin, who were desperate for income and could hardly bear losses.
The lawsuit alleges that the defendants exploited these investors by promising them financial freedom and then recruited the same AWS Mining victims for NovaTech, taking advantage of their lack of access to traditional financial markets.
In a damaging revelation, the lawsuit also accuses Cynthia Petion of assuming the title “Reverend CEO” and deceptively proclaiming NovaTech as “God’s vision.”
NovaTech and AWS mining lawsuit
She allegedly promoted these projects in Creole, exploiting the religious faith of investors. In private communications, she allegedly described her victims as cult members and herself as a zookeeper, noting their callous following and unconditional agreement with everything she proposed.
In 2022, the Petions had settled clandestinely in Panama. They were reported to have joked with another promoter that US authorities wouldn’t be able to serve them if they couldn’t find them. By May 2023, NovaTech had closed its doors and the Petions, along with their fellow promoters, had absconded with millions of dollars in recruitment 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 Petitioners, AWS Mining and NovaTech were recently the targets of a $2 billion class action lawsuit filed in February of this year, no criminal charges have been filed. Petitions has yet to officially respond publicly to the allegations.
In a related legal matter, the attorney general Letitia James continues her legal fight against the Digital Currency Group (DCG), its founder and CEO Barry Silbert, and Soichiro “Michael” Moro, the former CEO of DCG’s crypto trading arm, Genesis. On Tuesday, James’ office filed a motion opposing the dismissal of a case against DCG, Silbert and Moro initiated in March.
The lawsuit accuses Genesis, DCG, Silbert and Moro, along with crypto exchange Gemini, of defrauding investors by concealing a large $1 billion deficit on Genesis’ balance sheet following the fund’s collapse Singapore-based crypto speculator Three Arrows Capital, which was Genesis’ second largest borrower at the time.
According to allegations in James’ October lawsuit, Genesis and DCG misled investors with false assurances on Twitter that DCG had absorbed Genesis’ losses. Instead of covering these losses, DCG allegedly simply issued a promissory note to Genesis, agreeing to pay $1.1 billion over ten years at 1% interest, simply to give the illusion of liquidity.