Nova Labs is the company behind Helium Mobile, a crypto enabled cell phone network. On Friday the SEC sued them. Nova Labs is accused by the SEC of registration and fraud violations.
Gary Gensler, the SEC’s former chair and chief executive officer (CEO), was forced to retire after four years in office. The lawsuit ended up being his last act as SEC chairman. It seemed like a fitting way to end the tenure of Wall Street’s most powerful cop. He was often at odds with the crypto-industry, which snarled in his face. “regulation by enforcement” approach. His staff departs with a lawsuit against a company it had been investigating for years — and which many in crypto think could give the asset class real-world utility.
The SEC argued that Helium hotspots — which provide wireless connectivity and dole out token rewards — along with discovery mapping — where Helium Mobile users share their data with the company in exchange for tokens — both equate to unregistered securities sales. The agency also accused Nova Labs of fraudulently telling potential investors that Lime, Nestlé and Salesforce had used its wireless network.
Nova Labs’ executive informed me that the Gensler led SEC investigation had been ongoing for over two years before the lawsuit and was called the “last-day litigation.” “as irresponsible as it is wrong-headed.”
Fox Business reported that the President Trump aims for the CFTC to take the lead in regulating crypto. This means that the SEC may not have much to say about alleged cryptocurrency securities.
Mashable reported that in the mid-2022 period, Helium claimed on their website to be a partner with Lime’s scooter app, while Lime stated the partnership did not exist. The exposé led to a bit of egg on the face for Helium, which removed mentions of Lime as well as Salesforce from its website shortly thereafter. The SEC also says Helium falsely told investors that Nestlé was involved in the Helium network, whereas actual contact between the two was limited.
Nova Labs’ CEO Amir Haleem claimed on X, that the SEC claims were not true. “hold any water at all.” Haleem also posted an image of a email sent by 2020 from Salesforce. This screenshot seemed to confirm a partnership between both companies.
It may appear that the lawsuit will not be heard, since the SEC under Trump is likely to take an approach more friendly to crypto. Reuters stated that Trump’s SEC would freeze all crypto litigation that did not involve fraud. Gensler’s SEC might have tried to make Nova Labs continue the suit by charging them with fraud.
Now, an SEC under Paul Atkins might be forced to choose whether to continue a suit it did not start or to appear to ignore fraud.
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