New York seeks nearly $1.37 billion from NovaTech founders in crypto fraud case

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NY sues NovaTech founders

Highlights

New York Attorney General seeks nearly $1.37 billion from NovaTech founders Cynthia and Eddy Petion for alleged crypto fraud involving $1.16 billion in investor deposits.
Filings reveal Cynthia Petion authorized at least $134.5 million in withdrawals to personal wallets, and NovaTech lost $18.19 million of $25.99 million deposited with B2Broker.
After a default judgment in August 2025, four promoters settled for nearly $6 million and received permanent industry bans, escalating enforcement against crypto pyramid schemes.

Court filing outlines deposit flows and state claims

As reported by The Block, citing a court filing by the New York Attorney General's office, investors deposited $1.16 billion worth of cryptocurrency into NovaTech wallets between August 2019 and May 2023. The filing says at least $134.5 million in withdrawals went to wallets belonging to Cynthia and Eddy Petion, with Cynthia authorizing the transfers.

The Attorney General is seeking $1.13 billion in disgorgement and another $232.5 million in prejudgment interest, taking the total claim to nearly $1.37 billion. Prosecutors also say NovaTech deposited $25.99 million with trading platform provider B2Broker between August 2019 and April 2023, and that traders lost $18.19 million of that amount.

The filing alleges NovaTech paid supposed trading profits and recruitment bonuses with money from new investors rather than legitimate trading gains. The case began in June 2024, when Attorney General Letitia James sued NovaTech and cryptocurrency mining company AWS Mining, alleging both operated illegal pyramid schemes.

Enforcement pressure expands across the crypto scheme case

The latest request follows a default judgment issued in August 2025 after the Petions failed to respond to the lawsuit. James' office says the couple has since fled the U.S.

James says NovaTech and AWS Mining scammed thousands of vulnerable New Yorkers by presenting the investment as safe while operating a pyramid scheme. She says the operation targeted immigrant and religious communities with promises of a better life and instead took victims' life savings.

Separately, four promoters have agreed to pay nearly $6 million in disgorgement for victims and have been permanently barred from the securities, commodities, and cryptocurrency industries. The case adds to regulatory pressure on crypto investment programs that prosecutors say rely on fresh deposits rather than underlying trading activity.

Our earlier article on Q3 cybersecurity funding outlined how global cybersecurity and privacy startups raised $6.8 billion, with totals lifted by larger late-stage rounds even as deal counts declined. We also noted that AI- and identity-security companies attracted much of the capital, while major acquisitions signaled continued consolidation as firms invest to reduce fraud and other digital risks.

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