NY AG James Sues Crypto Firms NovaTechFx and AWS Mining, Alleging $1B Fraud Scheme

News | June 17, 2024 By:

On Thursday, June 6, 2024, New York Attorney General Letitia James sued cryptocurrency trading company NovaTechFx and mining company AWS Mining, as well as their founders and promoters, alleging they defrauded over 11,000 New Yorkers out of more than $1 billion through illegal pyramid schemes.

According to the lawsuit, AWS Mining targeted immigrant communities, particularly Haitian New Yorkers, with promises of generating huge monthly returns from mining bitcoin and other cryptocurrencies. Cryptocurrency mining is the process of using high-powered computers to verify transactions in digital currencies and mint new units of them. AWS Mining promoted returns of 15-20% per month and 200% returns within 15 months but did not generate enough profits to pay investors as promised. The company collapsed in 2019, costing investors millions.

After AWS Mining fell apart, Cynthia and Eddy Petion launched NovaTechFx, which the suit says preyed on the same communities through prayer groups and social media platforms like WhatsApp. They allegedly falsely advertised NovaTech as a registered hedge fund and claimed it was licensed for crypto trading in the U.S. From 2019-2023, investors deposited more than $1 billion worth of cryptocurrency with NovaTech. However, only about $26 million was actually traded on its platform, according to Attorney General James’ investigation.

Regardless of market conditions, NovaTech consistently announced weekly trading profits to investors. However, the lawsuit maintains these profits were fabricated and payments chiefly came from other investors’ deposits rather than actual returns. When NovaTech collapsed in May 2023 after being unable to pay withdrawal requests, tens of thousands of investors lost their funds.

In addition to banning all the companies and individuals from securities and commodities businesses in New York, Attorney General James seeks compensation for victimized investors. If successful, it would be among the largest actions against alleged cryptocurrency fraud to date.

Speaking about the case, James warned that while technologies like cryptocurrency and blockchain have potential, bad actors continue exploiting them. Multiple community advocates praised the lawsuit for taking action against scams that specifically targeted Haitians and other ethnic groups.