New York’s attorney general has filed a lawsuit against two cryptocurrency companies, alleging that they were involved in a $1 billion pyramid scam.
Letitia James, the attorney general of New York, has announced in a news release that she has filed a lawsuit against AWS Mining and cryptocurrency exchange NovaTech, alleging that the companies bilked hundreds of thousands of consumers, 11,000 of whom were residents of New York.
The businesses reportedly promised substantial returns on investments via prayer groups, social media, and WhatsApp discussions between 2019 and 2023, according to the complaint.
But a closer look revealed that just $26 million of the $1 billion they acquired was really going toward trading digital assets on NovaTech’s cryptocurrency market.
As James himself said, “The fraudulent promises of improved lifestyles made by NovaTech and AWS Mining to thousands of New Yorkers who invested their money in their companies were completely untrue. Companies that offered cryptocurrencies to immigrant and religious groups used the promise of financial independence to scam them out of their life savings.
New Yorkers should be worried that these scams are a result of uncontrolled cryptocurrency platforms, but they should also be confident that we will utilize all available means to combat crypto fraud.”
NovaTech, which had been making up weekly payments to mask its tracks, failed in 2023, leaving consumers unable to withdraw their cash, while AWS Mining, which had promised investors significant returns by mining crypto assets, came apart in 2019 after failing to refund clients.
The news release states that James’ action aims to disgorge funds and seek damages, in addition to barring the businesses and their founders from doing business in New York involving securities or commodities.
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