New York AG Seeks $1.37 Billion From NovaTech Founders Over Alleged Crypto Ponzi Scheme
New York Attorney General Letitia James is seeking approximately $1.37 billion from NovaTech founders Cynthia and Eddy Petion over an alleged cryptocurrency Ponzi scheme that prosecutors say promised investors weekly returns of 2% to 4% while using new deposits to pay existing participants.
According to information reported by Wu Blockchain, the requested amount includes $1.13 billion in disgorgement and $232.5 million in prejudgment interest. The case centers on NovaTech’s handling of cryptocurrency deposits between 2019 and 2023, with court filings detailing how little of the money was directed toward trading and how funds allegedly reached the founders’ wallets.
NovaTech Deposits and Trading Losses
Court filings show that NovaTech received approximately $1.16 billion in cryptocurrency deposits during the 2019–2023 period. However, only $25.99 million was reportedly allocated to trading activities. Those trades resulted in losses of $18.19 million, according to the figures cited in the report.
The filings also indicate that at least $134.5 million reached wallets belonging to the founders. These figures form part of the financial picture underlying the authorities’ case against Cynthia and Eddy Petion, although the reported amounts represent allegations and information contained in court documents rather than an independent determination of every transaction’s purpose.
The disparity between the reported volume of deposits and the relatively small amount directed toward trading is central to understanding the allegations. Prosecutors contend that NovaTech’s business model relied on incoming investor money to fund payments to other participants instead of generating the returns promised through cryptocurrency trading.
Alleged Weekly Returns and Investor Payments
Prosecutors allege that NovaTech promised investors returns of 2% to 4% per week. According to the allegations, payments to investors were funded with deposits from new participants, a practice associated with Ponzi schemes because payments depend on continued inflows rather than sustainable investment profits.
The reported trading figures are relevant to that allegation. Of the $1.16 billion in cryptocurrency deposits identified in the court filings, $25.99 million reportedly went toward trading, which lost $18.19 million. At least $134.5 million was also reported to have reached the founders’ wallets.
The attorney general’s demand financial seeks to recover funds through $1.13 billion in disgorgement, alongside $232.5 million in prejudgment interest. Disgorgement generally refers to the recovery of gains alleged to have been obtained improperly, while prejudgment interest seeks compensation for the time value of money before a judgment is entered. The requested total is approximately $1.37 billion.
Founders and Promoters Face Legal Consequences
The report states that Cynthia and Eddy Petion reportedly fled the United States after a default judgment was entered in August 2025. A default judgment can be issued when a defendant fails to respond or participate as required in a legal proceeding. The reported judgment followed the allegations surrounding NovaTech’s operations.
The case has also markets involved individuals who promoted the platform. Four promoters agreed to pay nearly $6 million and accepted permanent bans from the industry, according to Wu Blockchain. Their agreements represent a separate development from the attorney general’s demand against the NovaTech founders.
The $1.37 billion sought from Cynthia and Eddy Petion consists of $1.13 billion in disgorgement and $232.5 million in prejudgment interest, while the reported court filings detail $1.16 billion in cryptocurrency deposits received between 2019 and 2023.
Writer: Victoria HaleTechnology & Blockchain WriterVictoria Hale writes about blockchain technology, digital infrastructure, and the intersection of emerging technologies with finance. Her articles explore how new protocols and systems are shaping the evolving digital economy.She prioritises clarity and accuracy when explaining technical developments to a general audience.
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