New York Sues Crypto Miner and Exchange for $1 Billion In Fraud

New York Attorney General Letitia James has levied another billion-dollar lawsuit against crypto scammers in the state that she says defrauded hundreds of thousands of investors.

James’ office accused crypto exchange NovaTech and mining firm AWS Mining of “engaging in illegal pyramid schemes” that robbed investors, including 11,000 New Yorkers, of over a billion dollars’ worth of cryptocurrency, according to a Thursday press release. She now seeks to ban both firms from doing further business in New York.

“These cryptocurrency companies targeted immigrant and religious communities with promises of financial freedom but instead stole their money and drained their life savings,” said James, noting their use of common crypto scam channels including social media and WhatsApp groups.

According to the lawsuit, AWS Mining and its promoters–naming Panama residents Cynthia and Eddy Petion, among others–promised investors “15 to 20 percent monthly returns” through crypto mining business, including bonuses for roping in new investors.

Unable to sustain its promised returns for long, the company collapsed in 2019, after which the Petions moved on to launch NovaTech. The startup trading platform recruited customers using similar tactics: high-return promises and recruitment bonuses.

While supposedly paying investor returns using the company’s weekly profits, investor profits were actually generated using money coming in from new investors. Despite taking in over a billion dollars between 2019 and 2023, prosecutors say the platform only ever processed $26 million in actual crypto trades.

“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,” James vowed.

The NYAG has led a slew of high-profile cases against crypto industry leaders, securing $2 billion from crypto trading desk Genesis Global following its late 2022 collapse.

She also secured $22 million from crypto exchange KuCoin last year for failing to register as a commodities and securities exchange. The lawsuit famously alleged that Ethereum is an unregistered security rather than a commodity—a debate that regulators nor lawmakers have yet sorted out.

The US House of Representatives recently passed legislation in an attempt to clear the air on how commodities and securities law applies to crypto, and how exchanges can properly register with each agency.

Edited by Ryan Ozawa.