SEC accuses Nova Labs of unregistered crypto securities offerings
The United States Securities and Exchange Commission (SEC) filed a lawsuit against Nova Labs, the firm behind the open-source Helium network, just days before SEC chairman and prominent crypto critic Gary Gensler resigned on January 20.
The SEC said the company sold unregistered investment products, including those that issued cryptocurrency and a program that allowed users to exchange their personal data for crypto assets.
Days before Gensler's resignation, Nova Labs was hit with a lawsuit
In a January 17 filing with the SEC, Nova Labs described the company's cryptocurrency Helium (HNT) as offering electronic devices called “hotspots,” selling unregistered securities, and a program called “Discovery Maps” where users are located. It can exchange their personal data for crypto.
Source: United States Securities and Exchange Commission
The term “unregistered securities” is well-known in the crypto industry, having been the subject of several similar lawsuits at the SEC over the years under Gensler's leadership.
In July 2023, Ripple Lab won a major victory for the industry, when it was decided that XRP (XRP) did not qualify as an unregistered security sale in connection with the programmatic sale on the digital asset exchange, the SEC was quick to challenge the decision and appeal.
Meanwhile, the SEC also accused Nova Labs of making false claims to investors, saying major companies such as micro-mobile company Lime, food and beverage giant Nestlé and cloud computing software company Salesforce are using its wireless network. They weren't.
SEC may drop some crypto cases in 2025
However, when new leadership at the SEC takes over on January 20, the agency may consider dropping some crypto enforcement issues.
Related: SEC charges digital currency group for misleading investors
A Jan. 15 Reuters report cited “people briefed on the matter” that the SEC may review court cases against crypto companies within days of Trump's inauguration.
The report suggests that the commission may dismiss lawsuits that do not involve allegations of fraud, hinting at cases that only involve violations of securities laws.
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