New York Seeks $1.37 Billion Recovery From Novatech Founders in Crypto Fraud Case

New York is seeking approximately $1.37 billion from Novatech founders Cynthia and Eddy Petion after a court entered a default judgment in a state crypto fraud case, according to court filings.

The case centers on the movement of money into and through Novatech, a platform presented to investors as an opportunity to participate in cryptocurrency and other trading activities. State records indicate that investors deposited more than $1.16 billion into the operation. Of that amount, only about $26 million was transferred to the trading platform that Novatech identified as the destination for investment activity.

The figures highlight a substantial gap between the money collected from participants and the amount that, according to the state’s filings, was actually sent to the platform intended to carry out trades. The difference is roughly $1.13 billion. New York is seeking to recover that amount through the judgment, along with additional penalties and other relief that bring the total claim to about $1.37 billion.

A default judgment is entered when a defendant does not successfully respond to or contest a legal action within the required process. It allows the court to decide the case based on the claims and evidence presented by the plaintiff rather than after a full trial on disputed issues. The judgment does not, by itself, guarantee that the entire amount will be collected, but it establishes the financial liability sought by the state against the defendants.

The proceeding illustrates the difficulty regulators face when pursuing large online investment operations that collect funds from participants across jurisdictions. Digital-asset businesses can receive money through multiple payment channels and operate through entities or platforms in different locations, potentially complicating efforts to trace assets and enforce court orders.

The state’s allegations focus on how Novatech represented the use of investor funds and how those representations compared with the money flow documented in the filings. Investors deposited more than a billion dollars, while the amount directed to the identified trading platform represented only a small fraction of the total. Based on those figures, approximately 2.2% of the deposits reached that platform.

The remaining funds are central to the state’s recovery effort. The filings provide the basis for New York’s calculation of damages, but the gap between deposits and trading transfers should not automatically be understood as a final accounting of every dollar or as proof that all of the difference was taken in the same way. Determining where funds went and whether they can be recovered generally requires additional financial tracing and enforcement work.

The judgment against Cynthia and Eddy Petion is therefore an important legal step, but not necessarily the end of the case. Securing a monetary award and collecting it are separate stages. State authorities may need to identify assets, pursue accounts or property, and address claims involving funds held in other jurisdictions. The practical outcome for investors will depend in part on what assets remain available and whether they can be reached under applicable law.

The amount sought also reflects the scale of Novatech’s alleged operation. A claim of $1.37 billion is far larger than the amounts typically involved in individual consumer investment disputes and places the matter among the more significant financial enforcement cases involving a cryptocurrency-related business. It underscores how rapidly online investment platforms can accumulate substantial sums when they attract participants through digital networks.

For investors, the case is another reminder that the apparent size of a trading operation does not establish how customer funds are being used. Claims that money is being placed into cryptocurrency markets or other investments must be supported by verifiable records, including evidence of actual trading activity, custody arrangements and independent financial controls. A platform’s ability to collect deposits is not the same as its ability to generate returns or safeguard those deposits.

The New York filings do not change the basic numerical picture: more than $1.16 billion entered the Novatech operation, about $26 million was sent to the stated trading platform, and the state is pursuing roughly $1.37 billion from the company’s founders following the default judgment. Those figures will shape the next phase of the dispute as authorities seek to convert the court’s ruling into recoveries for affected investors.