New York AG Seeks $1.37bn From NovaTech Founders Over Alleged Crypto Ponzi Scheme

The New York attorney general, Letitia James, is seeking a court order requiring the founders of NovaTech, a defunct crypto and forex trading platform, and their related companies to pay $1.37bn over what her office describes as a Ponzi scheme.

The request targets Cynthia and Eddy Petion, who were found liable by default in August 2025 after failing to respond to the lawsuit, according to Cointelegraph.

What the attorney general is asking for

The filing, made on Thursday, seeks the return of roughly $1.13bn in investor funds alongside $232.5m in interest. The motion also asks for a further sum of about $6.15m, including interest, linked to AWS Mining, an earlier crypto mining scheme that collapsed in 2019.

At the same time, the attorney general's office announced that four people who recruited investors into NovaTech have agreed to pay nearly $6m between them. Those settlements are intended to benefit victims, according to the office.

The request for a monetary judgment follows the default ruling last year. A default judgment is typically entered when a defendant does not answer a claim, meaning liability is established without the case being contested at trial. The remaining step is for the court to determine how much the defendants owe.

How the money moved

The most striking figures in the filing concern where investor deposits actually went. According to the attorney general, from August 2019 to May 2023 investors sent about $1.16bn to wallets controlled by NovaTech.

Just around $26m of this sum was passed to B2Broker, the platform's trading provider, for the purpose of trading. That amounts to a little over 2% of the money investors handed over.

The gap goes to the heart of the Ponzi allegation. A platform that markets itself as a trading operation but deploys only a small fraction of client money into markets would have to rely on fresh deposits to fund withdrawals and promised returns. That dependence tends to hold only as long as new money keeps arriving faster than existing investors try to leave.

When NovaTech failed in 2023, tens of thousands of people found themselves locked out of their money. In June 2024, the attorney general brought a lawsuit against NovaTech, AWS Mining and associated companies.

Who was targeted

According to the attorney general's office, losses among New York residents ran to tens of millions of dollars across NovaTech and AWS Mining, affecting upwards of 11,000 people in the state.

The complaint alleged that promoters focused on Haitian and other immigrant communities. Recruitment ran through prayer groups, social media and WhatsApp, with prospective investors promised high returns and bonuses for bringing in others.

That pattern is familiar to fraud investigators. Schemes that spread through close-knit religious, ethnic or linguistic networks, sometimes described as affinity fraud, can grow quickly because trust within the group substitutes for due diligence. Recruitment bonuses add a further incentive for existing participants to draw in friends and relatives, which can widen losses within a single community.

The settlements with four promoters suggest the attorney general is pursuing not only the founders but also the intermediaries who helped bring investors in. That approach reflects the reality that in referral-driven schemes, recruiters often handle the relationships with victims and may have earned payments tied to the deposits they generated.

Why the case matters

The sums involved place NovaTech among the larger alleged crypto-linked frauds pursued by a US state authority. A request of $1.37bn signals that New York intends to seek the full scale of investor deposits rather than a symbolic penalty.

The case also highlights how products blending crypto and foreign exchange trading can be used to give an operation the appearance of legitimacy. Pointing to a named trading provider and offering exposure to two popular markets may have reassured investors who had little means of checking how their money was actually used.

For regulators, the case reinforces a broader enforcement trend in which state attorneys general play an active role alongside federal agencies in policing digital asset schemes, particularly where local residents bear the losses.

Risks and open questions

A court order for $1.37bn would not guarantee that victims receive anything close to that amount. Judgments are only as valuable as the assets that can be found and seized, and the filing's own figures indicate that most deposited money did not reach the trading account it was supposedly destined for.

The defendants' failure to respond to the lawsuit may also complicate collection. Defendants who do not engage with proceedings can be difficult to compel to pay, and assets held in crypto or across jurisdictions can be hard to trace and recover.

Cointelegraph asked the attorney general's office about the method for sharing out any money recovered among victims and about possible measures to enforce the judgment. It had not received a reply by the time of publication.

The nearly $6m from the promoter settlements, while meaningful, is small relative to the losses described in the filing. How that money is allocated across more than 11,000 affected New Yorkers, as well as investors elsewhere, remains unclear from the available information.

There is also a gap between the headline request and the losses attributed specifically to New Yorkers. The office described local losses as tens of millions of dollars, while the deposit figures run to more than $1bn, indicating that the platform drew money from a much wider base than New York alone.

What to watch next

The immediate question is whether the court grants the attorney general's motion in full and enters a monetary judgment against the Petions and their companies.

Beyond that, several developments will shape what victims ultimately recover:

• Whether the attorney general's office sets out a process for distributing recovered funds, including the promoter settlements
• What enforcement measures are taken to locate and seize assets held by the founders or related entities
• Whether further promoters or intermediaries reach settlements or face separate action
• How the separate claim of about $6.15m tied to AWS Mining is resolved

The case is likely to be watched by other state authorities dealing with similar referral-based crypto schemes, particularly those that spread through community networks. The outcome of the collection effort, rather than the size of the judgment itself, will determine how much relief reaches those who lost money.