New York sues two crypto companies over $1 billion pyramid schemes targeting Latino migrants

New York Attorney General Letitia James sued two cryptocurrency companies and their promoters in a Manhattan state court, alleging they defrauded over $1 billion from thousands of victims by exploiting their religious faith, Reuters reported.

The lawsuit alleges that investors, lured by promises of weekly profits, sent NovaTech Ltd. said amount over nearly four years before it collapsed in May 2023. Of that amount, only $26 million was used for trading, the outlet says.

The second company, AWS Mining Pty Ltd, was accused of falsely claiming for more than two years before its crash in 2019 that it could triple investors' money in 15 months through mining, which consists of computers verifying cryptocurrency transactions and generating new cryptocurrency.

According to the indictment, victims were allegedly targeted through prayer groups, social media and WhatsApp, sometimes in Creole to reach Haitian investors.

As per the New York AG, NovaTech co-founder Cynthia Petion branded herself "Reverend CEO" and told investors that NovaTech was executing God's vision. Privately, however, she called herself the "Zookeeper" and belittled her investors as a "cult" whose members "just agree with everything you say."

"These cryptocurrency companies targeted immigrant and religious communities with promises of financial freedom but instead stole their money and drained their life savings," James said in a statement. "We are seeing the real dangers of unregulated cryptocurrency platforms with schemes like these."

This is not the first time that Latinos living in the United States have been targeted in crypto scams. In March, the Securities and Exchange Commission expanded charges in a case involving the company CryptoFX, which tricked more than 40,000 people, mostly Latinos in the U.S., into lending money with the promise of big profits from cryptocurrency investments.

According to the SEC, from May 2020 to September 2022 the company "used substantially all investor money to make Ponzi payments, pay commissions to salespeople in a multi-level marketing scheme, and for personal purchases."

"Cryptocurrencies lack typical protections, because they are not controlled by any single institution, and it's largely an unregulated industry. And because of that, it's susceptible to scams, hacks and frost," Crediverso CEO Carlos Hernández told The Latin Times in a previous interview.

"The very nature of the industry itself is something that many consumers should be wary of how they navigate before you even get into the fact that there are actual scams happening out there," he added.