Thomas Daniels
Nova Labs has been charged by the U.S. Securities and Exchange Commission (SEC) with making false statements about business relationships and unregistered securities offerings in an attempt to entice investors.
Unregistered Securities Offerings Allegations
According to the SEC’s complaint, Nova Labs has been using two flagship products to offer unregistered investment contracts since April 2019:
Hotspots: Equipment made to mine the HNT, MOBILE, and IOT tokens, the three cryptocurrencies produced by Nova Labs.
The Discovery Mapping Program is a scheme that gives MOBILE tokens to users that contribute network data.
According to the SEC, Nova Labs promoted these goods as investment opportunities, highlighting the potential for profits from the company’s wireless network expansion. The company allegedly asserted that this network development would increase demand and raise the token’s value, which would lead to large returns for investors.
Claims of Fraudulent Partnerships
The SEC charges Nova Labs with serious fraud after it allegedly misrepresented alliances with big businesses like Nestlé, Salesforce, and Lime. According to the complaint, businesses such as Nestlé and Lime denied any affiliation with Nova Labs in cease-and-desist letters after learning of these allegations.
The SEC highlights that these false claims violated federal securities laws’ antifraud provisions by influencing investor decisions.
SEC Demands and Legal Violations
Nova Labs is accused by the SEC of issuing unregistered securities in violation of Sections 5(a) and 5(c) of the Securities Act of 1933, as well as of fraud in violation of Section 17(a)(2).
The Commission is looking for:
- permanent orders to stop future transgressions.
- disgorgement of interest as well as earnings.
- civil fines to serve as a disincentive.
This enforcement action demonstrates the SEC’s ongoing examination of cryptocurrency businesses that operate outside of legal restrictions and are accused of deceiving investors.
