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07/06/24
242
Crypto Firms Sued in New York for Allegedly Defrauding Investors
On June 6, a lawsuit was filed against crypto trading firm NovaTech, crypto mining firm AWS Mining, and other firms and individuals, for allegedly defrauding numerous investors globally by promoting two consecutive fraudulent investment schemes.
The lawsuit was filed by New York Attorney General Letitia James on behalf of the people of New York, alleging that the two fraudulent investment schemes include AWS Mining PTY LTD (“AWS Mining”) and NovaTechFx (“NovaTech”).
Being pyramid schemes, promoters are rewarded with crypto when they recruit others to do the same. Likewise, NovaTech was a Ponzi scheme which promised investors profits from crypto trading; however, some investors were paid from other investors’ crypto assets.
According to the lawsuit, the firms targeted immigrant communities, especially Haitian New Yorkers, in prayer groups as well as via social media and WhatsApp group chats, fraudulently promising them high returns on investments.
“An investigation by the Office of the Attorney General (OAG) found that from 2019 to 2023, investors deposited over one billion dollars’ worth of cryptocurrency in NovaTech but only a fraction, less than $26 million, was actually traded on NovaTech’s cryptocurrency trading platform,” reads a press release from the Attorney General.
Hence, James is seeking to prohibit the firms and their founders from doing business in the state and to secure disgorgement and damages.
“These cryptocurrency companies targeted immigrant and religious communities with promises of financial freedom but instead stole their money and drained their life savings. 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,” said James.
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