The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Nova Labs, the company behind the Helium Network, alleging unregistered securities offerings. This legal action comes just days before SEC Chair Gary Gensler, a vocal critic of the cryptocurrency industry, steps down on January 20.
Nova Labs Accused of Selling Unregistered Securities
In a January 17 statement, the SEC accused Nova Labs of selling unregistered investment products, including “Hotspots,” electronic devices used to mine the Helium cryptocurrency (HNT). The lawsuit also targeted Nova Labs’ “Discovery Mapping” program, which allegedly allowed users to trade personal data for crypto assets.
The SEC further alleged that Nova Labs made false claims to investors, suggesting partnerships with prominent companies like Lime, Nestlé, and Salesforce, which the regulator claims were never involved with the Helium wireless network.
Gensler’s Legacy of Aggressive Crypto Regulation
The lawsuit against Nova Labs adds to a series of enforcement actions against the crypto industry under Gensler’s leadership. Known for his strict stance on cryptocurrencies, Gensler spearheaded efforts to classify many crypto assets as unregistered securities.
Despite a major victory for the crypto industry in July 2023—when Ripple Labs won a ruling that its XRP token did not constitute an unregistered security for programmatic sales—the SEC appealed the decision and has maintained its hardline approach.
Changes on the Horizon?
With the inauguration of President-elect Donald Trump and the arrival of new SEC leadership on January 20, the agency’s approach to crypto enforcement could shift. A Reuters report on January 15 suggested that the SEC may review and potentially drop certain non-fraud-related cases against crypto firms. Litigation involving alleged securities law violations that do not include fraud could be paused or frozen under the new administration’s pro-crypto stance.
The outcome of the Nova Labs lawsuit and other ongoing cases could have significant implications for the regulatory environment surrounding cryptocurrency in the U.S. If the SEC softens its approach under new leadership, it may provide relief to the crypto industry, but questions remain about the future of enforcement actions initiated during Gensler’s tenure.
