Nova Labs to pay $200K penalty for misrepresenting investor information to SEC; The company agreed to settle civil securities fraud charges over exaggerating relationships with big-name enterprise customers.
Nova Labs, the parent company behind the Helium blockchain, has agreed to pay the U.S. Securities and Exchange Commission (SEC) $200,000 to settle civil securities fraud charges.
The SEC accused Nova Labs of misleading institutional investors during a funding round from late 2021 to early 2022, during which it raised $200 million in fresh capital at a $1 billion valuation. Specifically, the regulator claimed that Nova Labs exaggerated its relationships with big-name enterprise customers, including ‘Nestle, Salesforce, and Lime‘.
The SEC alleged that Nova Labs repeatedly touted these corporations as customers and ‘users’ of its technology, when in reality, the company’s actual contact was limited and primarily occurred before the launch of the Helium network in mid-2019. For instance, Nestle‘s relationship with Nova Labs was a small-scale test of some of the company’s component hardware in its water-delivery business in 2018.
As part of the settlement agreement, the SEC dropped two other claims that the company violated federal securities laws, including through the sale of three of its tokens: the ‘Helium Network Token (HNT), the Helium Mobile Network Token (MOBILE), and the Helium IoT Network Token (IOT)’. Those claims were dropped with prejudice, meaning the SEC is barred from bringing a future case under the same allegations.
Nova Labs celebrated the settlement in a blog post, calling it a ‘major win for Helium and the People’s Network.’ The company claimed that the outcome establishes that selling hardware and distributing tokens for network growth does not automatically make them securities in the eyes of the SEC. However, the company did not mention the $200,000 settlement or the claim that Nova Labs misled investors.
The settlement agreement is subject to approval by a federal judge. When reached for comment, Nova Labs Chief Legal Officer Sarah Aberg stated that while the settlement prohibits the company from admitting or denying the claims, ‘we can point out that, both at the time of those statements and today, data usage on the Helium Network has always been publicly available.’
