- SEC filed a lawsuit against Nova Labs for offering unregistered securities via mining devices.
- Nova Labs’ false claims misled investors about partnerships with major companies.
- With Gensler’s tenure ending, the lawsuit may signal changes in the SEC’s crypto enforcement.
The United States Securities and Exchange Commission (SEC) has filed a complaint against Nova Labs, which developed the Helium Network. The lawsuit was filed on January 17, just three days before SEC Chair Gary Gensler left the post on January 20. This legal action pertains to claims that Nova Labs offered unregistered securities with products that include cryptocurrency mining devices and a data trading program.
SEC Targets Nova Labs
The SEC stated that Nova Labs targeted investors with electronic devices called “Hotspots.” These devices are intended for mining HNT, the Helium cryptocurrency. The SEC has accused these companies of selling these devices in the market through the offer of unregistered securities. The SEC has also focused on a program known as Discovery Mapping, through which users can swap data for cryptocurrency.
Notably, such cases are part of the SEC’s efforts to control the use of cryptocurrency and Gensler has not hesitated to curb companies that have violated the securities laws.
Potential Shift in Enforcement
The SEC also accuseed Nova Labs of making false statements to investors apart from the securities laws violations. The firm reportedly told potential investors that large companies such as micro-mobility firm Lime, food company Nestlé, and cloud computing firm Salesforce were using or had invested in its wireless network. However, the SEC claimed that the companies had no connection with the Helium Network.
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This lawsuit is significant because it occurs at the final weeks of Gensler’s term as the SEC Chair. In the last few weeks, there have been speculations that the SEC might adopt a new approach under new leadership on crypto assets regulation. According to Reuters on January 15, the SEC could reopen or suspend some of the cases related to the crypto companies that have no fraud complaints.
While the SEC anticipates new leadership in the near future, the future of cryptocurrency enforcement is still unknown. The result of this case may become a precedent for further regulatory actions in the cryptocurrency business.
