New York AG Demands $1.37B From NovaTech Founders in Ponzi Case

If you thought crypto scams were a thing of the past, think again. New York Attorney General Letitia James is going after the founders of NovaTech for a staggering $1.37 billion — and this one has all the hallmarks of a classic Ponzi scheme dressed up in digital-currency clothing.

The massive damages request comes on the heels of a default judgment handed down in August 2025. When defendants in a civil case simply don't show up or respond, courts can issue a default judgment against them — essentially ruling in the plaintiff's favor automatically. That's what happened here, paving the way for the AG's office to now chase down the full financial penalty.

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But the founders aren't the only ones in hot water. The AG also announced nearly $6 million in settlements reached with four promoters tied to the scheme. These are the people who allegedly helped recruit victims and spread the word about NovaTech's supposed investment opportunities. Settlements with promoters are a common tactic regulators use to hold the broader network of a fraud accountable, not just the people at the top.

Ponzi schemes work by paying early investors with money from newer participants rather than from any real profits — and they inevitably collapse when there aren't enough new recruits to keep the cycle going. Victims are often left with little to nothing. A $1.37 billion recovery demand signals just how large NovaTech's operation allegedly was and how many people it may have hurt.

For everyday investors, this case is yet another reminder to be deeply skeptical of any platform promising guaranteed returns, especially ones that lean heavily on recruitment as a revenue model. If it sounds too good to be true in crypto, it almost certainly is. Continue reading at Cointelegraph.