The U.S. Securities and Exchange Commission sued the cryptocurrency startup NovaTech and its co-founders on Monday for fraudulently raising over $650 million from more than 200,000 investors.
TakeAway Points:
- The U.S. Securities and Exchange Commission on Monday sued the cryptocurrency company NovaTech and its co-founders, saying they fraudulently raised over $650 million from more than 200,000 investors worldwide, including many Haitian-Americans.
- The SEC also charged six NovaTech promoters with fraud, saying they kept recruiting investors despite “red flags.”
- India’s CCI withdraws a report accusing Apple of market abuse, following Apple’s protest over sensitive information.
US SEC opens lawsuit
The lawsuit alleges that the pair illegally raised over $650 million from over 200,000 investors worldwide, many of whom were Haitian-Americans.
NovaTech and co-founders Cynthia and Eddy Petion allegedly promised investors their money would be safe, with Cynthia Petion assuring they would be “in profit from day one.”
The SEC said the Petions instead used new money mainly to repay earlier investors and pay commissions to promoters, while syphoning millions of dollars for themselves. It said the scheme lasted for four years until NovaTech’s May 2023 collapse.
Monday’s lawsuit in Miami federal court came two months after New York Attorney General Letitia James sued NovaTech and the Petions in a state court in Manhattan, estimating their fraud at more than $1 billion.
The regulators said NovaTech tried to appeal to victims’ religious faith through social media, Telegram, and WhatsApp, and sometimes in the Haitian Creole language, with Cynthia Petion branding herself “Reverend CEO” and saying NovaTech was “God’s vision.”
Both regulators called the fraud a pyramid scheme, where companies pay bonuses or commissions to recruit new investors.
The Sec charges NovaTech promoters
The SEC also charged six NovaTech promoters with fraud, saying they kept recruiting investors despite “red flags,” such as delayed withdrawals and U.S. and Canadian regulatory actions, that raised questions about NovaTech’s legitimacy.
One promoter, Martin Zizi, agreed to pay a $100,000 civil fine. His lawyer did not immediately respond to a request for comment.
Both lawsuits seek restitution for victims and civil fines. The case is SEC v Nova Tech Ltd, U.S. District Court, Southern District of Florida, No. 24-23058.
India withdraws its antitrust report on Apple
India’s antitrust regulator, the Competition Commission of India (CCI), has decided to withdraw a report that accused Apple Inc. of abusing its market dominance. The initial investigation, conducted by an arm of the CCI, found that Apple exerted significant influence over the provision of digital products and services to consumers.
However, the findings were retracted after Apple protested that the report contained sensitive and privileged information. The sources, who requested anonymity due to the non-public nature of the discussions, indicated that it remains unclear whether the regulator will revive the probe, which would likely require restarting the process. Representatives for the CCI did not immediately respond to requests for comment, and Apple also declined to comment on the matter.
Apple’s place in the Indian market
In India, Apple controls just a single-percentage share of the 690 million-strong smartphone market, which is dominated by other foreign brands. Despite its relatively small market share, India is becoming an increasingly important manufacturing base for Apple. The company is seeking to reduce its reliance on China amid escalating geopolitical tensions.
The initial findings of the CCI probe, which were not made public and were shared only internally with regulators, were first reported by Reuters last month. This development highlights the complex regulatory environment that Apple navigates as it expands its global footprint.
