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New York Attorney General Sues Over $1 Billion Crypto Fraud

New York Attorney General Letitia James has initiated a lawsuit against Cynthia Petion, Eddy Petion, and others for running a complex series of cryptocurrency pyramid schemes allegedly defrauding many investors, including over 11,000 New Yorkers. Primarily targeting individuals of Haitian descent and leading to losses exceeding $1 billion.

Details of the Fraudulent Operations Revealed

The legal complaint details two primary fraudulent operations. The first, known as AWS Mining, promised investors a 200% guaranteed return but collapsed in April 2019. Following the collapse of AWS Mining, the Petions launched NovaTech, a platform purportedly dealing in cryptocurrency and foreign exchange trading.

From August 2019 to April 2023, NovaTech gathered over $1 billion in cryptocurrencies from investors, yet only $26 million was actively traded on the exchange. Attorney General James identified AWS Mining and NovaTech as pyramid schemes. She noted that these schemes rewarded promoters with cryptocurrency to recruit new investors.

NovaTech was also classified as a Ponzi scheme. This is because the promised returns were paid from new investors’ deposits, not from actual trading profits.

 Broader Implications and Call to Action

The complaint also accuses the defendants of engaging in affinity fraud by specifically targeting the Haitian community, utilizing the Creole language, and exploiting religious faith to promote their schemes as opportunities for achieving financial freedom.

In June 2022, the defendants sold their Florida home secretly and fled to Panama, transferring tens of millions of dollars worth of cryptocurrency out of NovaTech. This action signaled the beginning of the unraveling of their fraudulent activities.

The lawsuit against the Petions is part of a broader crackdown on fraud in the cryptocurrency market. This legal action aims to curtail deceptive practices within the industry.

This case highlights how financial scams often target minority communities. The Attorney General’s office is encouraging victims of these schemes to come forward as the investigation progresses. Their cooperation is crucial in helping to bring the perpetrators to justice.

Epoch Times CFO Arrested for Money Laundering

In a separate case, Bill Guan, the Epoch Times’ Chief Financial Officer, was arrested by the U.S. Department of Justice on money laundering and bank fraud charges. Guan faces accusations of laundering $67 million through cryptocurrency. The charges stem from his role managing the Epoch Times’ “Make Money Online” team from 2020 to May 2024.

These legal actions signal a robust response to fraudulent activities in the crypto sector and aim to restore integrity and investor confidence in this dynamic market space. The outcomes of these cases could have significant implications for regulatory approaches and investor protections in the cryptocurrency and NFT industries moving forward.

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Disclaimer: Cryptocurrency is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.

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