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New York Attorney General Letitia James has filed a lawsuit against two companies for orchestrating a cryptocurrency pyramid scheme. According to the lawsuit, the alleged companies and their promoters took advantage of the scheme, affecting more than 11,000 state residents.

The scam mainly targeted the Haitian community in the United States and involved two companies, AWS Mining and NovaTech. The information indicates that the scammers managed to cause losses of up to US$1 billion.

Legal measures against fraud

Attorney General James filed a lawsuit against the two companies accusing them of running a large-scale Ponzi scheme. The lawsuit specifically targets Cynthia and Eddy Petion, accused of promoting the activities of the two companies and causing billions in losses.

One of the companies, AWS Mining, promised high returns through supposed cryptocurrency mining and trading activities, offering returns of up to 200%. However, the company went bankrupt in April 2019, leaving a huge loss.

The second company (NovaTech), emerged shortly after the bankruptcy of AWS Mining and promised profits from trading and trading operations. This company received a large part of investments in amounts approaching US$1 billion between August 2019 and April 2023.

However, NovaTech’s trading operations generated only US$26 million during the four years of activity. Most of the returns paid, according to the prosecutor’s office, came from the entry of new investors into the scheme.

Letita James stated that the Petion couple were responsible for attracting new investors with promises of guaranteed returns, and their money went to pay old investors. Both AWS Mining and NovaTech followed the same Ponzi scheme script.

Companies preyed on vulnerable communities, using affinity fraud to exploit cultural and linguistic ties. In other words, they took advantage of the power of word-of-mouth advertising among Haitians, who maintain strong ties among themselves. To gain the victims’ trust, the Petion even advertised in Creole, Haiti’s native language.

Cryptocurrency scam

According to prosecutors, the Petions sold their Florida home and fled to Panama in June 2022. During their escape, they allegedly transferred tens of millions of dollars in NovaTech cryptocurrencies to their personal accounts. Then, complaints against the company began to appear.

The prosecutor’s complaint highlights the predatory nature of cryptocurrency scams, emphasizing how they were marketed to individuals who could least afford the losses. By advertising guaranteed returns and leveraging community ties, the scammers were able to accumulate significant funds before the scheme collapsed.

However, the attorney general promised to continue seeking justice for investors harmed by the scams. Her office’s investigation aims to recover lost funds and hold those accused accountable. Furthermore, the legal action also represents a broader effort to crack down on fraudulent practices using cryptocurrencies.

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