A $1.37 Billion Recovery Demand Against NovaTech Founders
New York Attorney General Letitia James has formally requested that a court order the former principals of NovaTech, a defunct cryptocurrency and forex trading platform, to pay $1.37 billion to victims of what the state describes as a Ponzi scheme. The Thursday court filing breaks down the figure into approximately $1.13 billion in misappropriated investor capital plus $232.5 million in accrued interest.
The individuals named in the filing are Cynthia and Eddy Petion, along with affiliated corporate entities. In August 2025, a court entered a default judgment against them after they failed to respond to the original lawsuit, effectively leaving them liable without a defense on the record.
Separately, four individuals who recruited investors into the NovaTech operation have entered into settlement agreements totaling nearly $6 million, with the AG's office confirming the funds are earmarked for victim compensation. An additional motion seeks roughly $6.15 million, including interest, connected to an earlier crypto mining scheme called AWS Mining.
James initiated legal proceedings against NovaTech, AWS Mining, and related companies in June 2024. AWS Mining collapsed in 2019, while NovaTech failed in 2023, leaving tens of thousands of investors unable to access their deposited funds.
How the Scheme Operated: Red Flags Traders Should Recognize
From a fraud-prevention standpoint, the NovaTech case contains several patterns that experienced traders and retail investors should treat as immediate warning signs.
According to the AG's filing, investors deposited approximately $1.16 billion into NovaTech's cryptocurrency wallets between August 2019 and May 2023. Critically, only about $26 million of that total was actually routed to the platform's trading provider, B2Broker, for execution in live markets. In other words, the vast majority of investor capital never entered a trading environment—a hallmark of Ponzi structures where incoming deposits are used to service earlier withdrawals rather than generate legitimate returns.
The complaint further alleges that promoters specifically targeted Haitian and other immigrant communities, leveraging prayer groups, social media channels, and WhatsApp to recruit participants. Promises of high returns were paired with recruitment bonuses, creating a multi-level incentive structure that encouraged existing members to bring in new investors. This combination of community-level trust-building, guaranteed-sounding returns, and referral compensation is a textbook profile of investment fraud.
The Human Cost: Over 11,000 Victims in New York Alone
The AG's office stated that more than 11,000 New York residents lost tens of millions of dollars through NovaTech and the earlier AWS Mining operation. The targeting of immigrant communities amplifies the severity of the harm, as victims in these groups may face language barriers, limited access to legal resources, and social stigma that discourages reporting.
The fact that a default judgment was necessary—meaning the Petions simply did not answer the court's summons—raises additional concerns about enforcement. Traders and investors should note that even when a judgment is entered, collecting billions from individuals who may have moved assets offshore or into crypto wallets outside U.S. jurisdiction can be a protracted and uncertain process.
Cointelegraph reached out to the New York Attorney General's Office to ask how any recovered funds would be distributed to victims and what enforcement mechanisms would be deployed to collect on the judgment. No response was received by the time of publication.
Key Takeaways for Traders and Investors
The NovaTech case, now entering its recovery phase, offers a concrete checklist of red flags that should prompt caution in any forex, crypto, or hybrid trading platform:
Disproportionate capital routing: If the bulk of your deposit never reaches a licensed broker or exchange and instead sits in the platform's own wallets, the risk of misappropriation is extremely high. Demand transparency about where funds are actually held and traded.
Recruitment-driven compensation: Platforms that reward members primarily for bringing in new investors—rather than for trading performance—mirror the structure of pyramid and Ponzi schemes.
Community-based targeting: Fraud operations often exploit tight-knit social or cultural networks (faith groups, ethnic communities, professional associations) to build trust quickly. Be skeptical when an investment opportunity is introduced exclusively through such channels without independent verification.
Guaranteed or unusually high returns: Any platform promising consistent high yields without commensurate risk disclosure should be treated as a red flag, regardless of the community in which it is promoted.
Opaque withdrawal history: In both AWS Mining (2019) and NovaTech (2023), the ultimate failure was the inability of investors to withdraw. Traders should stress-test their ability to exit a position or recover capital at any time before committing significant funds.
Lack of regulatory registration: Verify that any trading provider (in this case, B2Broker) and the platform itself hold appropriate licenses in your jurisdiction. The fact that only a fraction of NovaTech's deposits touched a registered broker should have been a glaring signal to regulators and investors alike.
For retail forex and crypto traders, the NovaTech judgment underscores a hard truth: even a billion-dollar court order does not guarantee that victims will actually recover their money. Due diligence before depositing—checking licenses, verifying where funds are held, and walking away from recruitment-heavy models—remains the single most effective defense against the next NovaTech.
