SEC charged Nova Labs of unregistered securities offerings and misleading investors with promises of financial rewards from “Hotspots” and a “Discovery Mapping Program.”
The Securities and Exchange Commission has accused Nova Labs of engaging in unregistered securities offerings and making misleading statements regarding business agreements in order to deceive investors.
According to the SEC’s complaint, Nova Labs has been selling unregistered investment contracts since April 2019 through two primary products: “Hotspots,” which are electronic devices that mine three different Nova Labs crypto assets (HNT, MOBILE, and IOT tokens), and a “Discovery Mapping Program,” which rewards users with MOBILE tokens for providing network data.
The lawsuit alleges that Nova Labs promised investors that their Hotspots and participation in the Discovery Mapping Program would yield financial rewards.
The company made these promises in relation to its attempts to construct and extend a wireless network, claiming that this would increase the demand and value for its cryptocurrency tokens, ultimately leading to gains for investors.
Nova Labs made false statements about its wireless network
The Securities and Exchange Commission (SEC) has made a severe complaint of fraud against Nova Labs, claiming that the company misled investors by claiming that large corporations such as Nestlé, Salesforce, and Lime were actively using their wireless network.
The complaint claims that Nestlé and Lime sent letters to Nova Labs, requesting them to stop making false allegations against them, when they discovered that Nova Labs was publicly asserting links that did not exist.
This is a violation of the antifraud sections of federal securities laws, according to the Securities and Exchange Commission (SEC), which alleges that these false partnership statements were material to investors’ decisions to purchase Nova Labs’ Hotspots and company shares.
For unregistered securities offerings, the action particularly accuses violations of Sections 5(a) and 5(c) of the Securities Act of 1933. Additionally, the case alleges violations of Section 17(a)(2) regarding fraud.
The Commission is attempting to obtain a number of remedies, some of which include permanent injunctions, the disgorgement of illicit gains along with interest, and civil monetary penalties.
With its enforcement action, the Securities and Exchange Commission (SEC) continues to focus on cryptocurrency companies that operate outside of the rules for securities registration while allegedly making deceptive promises in order to recruit investors.
