The perpetrators of an unregistered scheme to trade crypto and foreign exchange (FX) have been sanctioned by Ontario’s Capital Markets Tribunal.
In July, that tribunal found that Nova Tech Ltd. breached the Securities Act by engaging in unregistered trading, illegally distributing securities and violating a temporary cease trade order. Additionally, the tribunal found that the firm’s founder and CEO, Cynthia Petion, enabled those violations.
According to the tribunal, Nova Tech promoted a scheme on YouTube, Telegram and its own website. The scheme promised investors 3% weekly returns by trading in crypto and FX, and provided incentives for investors to bring in other investors to the scheme.
“Ultimately, Nova Tech stopped allowing investors to make withdrawals and later stopped communicating with investors. Investors lost the money they continued to hold in accounts with Nova Tech,” the tribunal said.
After finding that the firm and its founder violated securities rules, the tribunal permanently banned both Nova Tech and Petion, imposed a $2.5 million penalty, ordered them to pay almost $200,000 in costs, and to disgorge $31,000 in ill-gotten gains.
According to the tribunal, while the scheme likely generated “significantly more” than $31,000 in ill-gotten gains, the Ontario Securities Commission (OSC) wasn’t able to give an accurate accounting of how much investors lost to the scheme, the tribunal noted.
“The commission was unable to present a comprehensive disgorgement amount pertaining to all Ontario Nova Tech investors,” the tribunal said. “Nova Tech and Petion caused the commission’s inability to demonstrate a comprehensive disgorgement amount by not participating in the investigation or proceeding.”
While the OSC found that the scheme attracted more than 8,500 investors in Ontario, the regulator only requested $31,000 in disgorgement — a total that represented the losses of three investors who testified during the enforcement hearing.
Alongside the disgorgement, the tribunal ordered monetary penalties and market bans, citing the severity of the misconduct.
“We find that the circumstances of this case weigh heavily in favour of significant sanctions,” it said, adding that there were no mitigating factors.
“Rather, we find that the broad-based solicitation of investors, the failure to provide required information to investors, and the blatant breach of the temporary cease trade order all served as aggravating factors in determining sanctions,” the tribunal said.
The tribunal imposed $1 million in penalties each for the unregistered trading and illegal distribution violations, plus $500,000 for breaching a cease trade order — alongside permanent market bans.
“Anything less than a permanent ban would result in a loss of confidence in the integrity of Ontario’s capital markets and expose investors to the elevated risks that Nova Tech, Petion, and like-minded persons pose,” the tribunal said in its ruling.