NYAG Targets Crypto Scams with Billion-Dollar Lawsuit

New York Attorney General Letitia James has initiated a billion-dollar lawsuit against two cryptocurrency entities, NovaTech and AWS Mining, accusing them of defrauding hundreds of thousands of investors through illegal pyramid schemes. This legal action, announced in a recent press release, specifically highlights the victimization of over 11,000 New Yorkers, with losses totaling more than a billion dollars in cryptocurrency.

James’ office has charged that both NovaTech, a trading platform, and AWS Mining, a mining firm, preyed particularly on immigrant and religious communities, enticing them with promises of financial freedom. Instead, these promises led to significant financial losses, draining the life savings of many. The lawsuit details how these companies exploited common communication channels like social media and WhatsApp to reach and deceive their targets.

The legal filing outlines that AWS Mining, alongside promoters such as Panama residents Cynthia and Eddy Petion, promised investors monthly returns between 15 to 20 percent through crypto mining operations, and offered additional bonuses for recruiting new investors. However, the unsustainable model soon led to the company’s collapse in 2019. Subsequently, the Petions launched NovaTech, using a similar strategy of lofty return promises and recruitment incentives to attract customers.

Prosecutors have revealed that while NovaTech claimed to pay out investor returns from the company’s weekly profits, these payouts were actually funded by capital from new investors. From 2019 to 2023, while the platform allegedly took in over a billion dollars, only $26 million was processed in actual cryptocurrency trades.

Attorney General James emphasized the broader implications of these cases, stating, “We are seeing the real dangers of unregulated cryptocurrency platforms with schemes like these, but New Yorkers can rest assured that we will use the tools at our disposal to crack down on crypto fraudsters.” This lawsuit is part of a series of aggressive moves by the NYAG against the crypto industry, including significant settlements from entities like Genesis Global and KuCoin for their regulatory failures.

In the broader context, these actions come at a time when the U.S. House of Representatives has passed new legislation aimed at clarifying the application of commodities and securities laws to cryptocurrencies, indicating a push towards more stringent regulatory frameworks for crypto exchanges.

The NYAG’s relentless pursuit of justice in the crypto space underscores a critical drive to protect investors and maintain the integrity of financial markets. As the legal landscape evolves, these actions are pivotal in shaping a safer and more regulated cryptocurrency environment.