The United States Securities and Exchange Commission (SEC) has charged Nova Labs for defrauding investors, as the firm prepares to part ways with its current Chairman Gary Gensler.
According to the agency, the company behind the open-source platform Helium Network broke several laws and it intends to prosecute it under Sections 5(a), 5(c), and 17(a)(2) of the Securities Act of 1933 and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. The agency is seeking permanent injunctions over all ill-gotten gains, pre-judgment interest, and civil sanctions.
SEC to commence Nova Labs trials after Gensler’s tenure
The SEC claimed Nova Labs defrauded investors since 2019, making several unregistered offers and security sales. The firm sold hotspots that users used to mine their digital assets. In addition, the firm sold Discovery Mapping, where users exchange their private data for these tokens. The agency noted that unregistered securities leave users vulnerable since they lose certain layers of protection.
The SEC has previously carried out multiple charges against firms for the same reason under Gensler. Nova Labs was also accused of issuing false statements to lure investors. The agency highlighted that Nova Labs lied about several companies including Nestlé, Lime, and Salesforce using its services. However, when investigations concluded, the firms were not using its services.
A new agency team may close several cases
According to reports, the new pick for SEC Chair Paul Atkins will likely end crackdowns on crypto firms like it was carried out under Gary Gensler in the Biden administration. However, it remains unclear when the Senate will approve his nomination. However, with Gensler set to leave his post tomorrow, talks have been underway about a likely freeze on some cases.
According to a Reuters report, the SEC may withdraw most of the cases in court, focusing on only fraud cases at the beginning of the Trump administration. However, it is unclear if Nova Labs will be among the ones that will be withdrawn. The report noted that Republican SEC Commissioners Hester Peirce and Mark Uyeda will review the cases while determining the meaning of securities.