Gensler’s Last Act: SEC Files Lawsuit Against Helium Network Creator Nova Labs

Ahead of Monday’s regime shift alongside President Donald Trump’s inauguration, the SEC filed a lawsuit against Nova Labs, the original startup behind Helium—a decentralized network for sharing internet connectivity, fueled by crypto incentives.

In the complaint, filed Friday in the U.S. District Court for the Southern District of New York, lawyers alleged that Nova Labs (previously Helium Inc.) has sold millions of dollars in unregistered securities since April 2019 via the sale of electronic devices called hotspots, which mine crypto tokens while sharing internet connectivity with nearby devices.

The SEC further pointed to the feature called “Discovery Mapping,” which allowed users to swap their private data for crypto  tokens. Nova Labs also made “false and misleading” claims to potential investors that companies such as Lime, Nestlé, and Salesforce were allegedly using its decentralized network.

In 2022, Nova Labs told Decrypt that it would adopt a “much more rigorous” process for marketing brand partnerships following disputes from Salesforce and Lime, which Nova said had tested Helium products.

“Nova Labs knew or recklessly disregarded [that] Nestlé, Salesforce, and Lime were neither Nova Labs’ customers nor ‘users’ of Nova Labs’ network,” lawyers said in the lawsuit, adding that the companies sent cease and desist letters to Nova Labs over the matter.

“Nova Labs’ false and misleading statements to potential investors touting business relationships that did not exist violated the antifraud provisions of the federal securities laws,” the lawyers added. 

Helium co-founder and Nova Labs CEO Amir Haleem refuted the allegations in a post on X (formerly Twitter), published Sunday.

“Naturally, none of the claims hold any water at all,” Haleem said in the post. “The SEC has wasted two years of our time and millions of our dollars pursuing any claim they could think of.”

The lawsuit calls for Nova Labs to pay a civil penalty, the amount of which has not yet been determined. It also calls for the company to be barred permanently from dealing in unregistered securities offerings. 

The lawsuit was filed just before SEC Chair Gary Gensler resigned from his post on Monday alongside the inauguration of Donald Trump. His departure formed part of a broader clearing of house among the top ranks of several government agencies responsible for regulating digital assets as pro-crypto President Donald Trump returned to the White House Monday.

SEC Commissioner Mark Uyeda will serve as acting chair, though Trump has nominated former Commissioner Paul Atkins to be the permanent chair.

Helium comprises multiple networks, including one that lets node operators share their internet connection to power nearby trackers and sensors, and another that lets people run 5G nodes to provide service to smartphones and other devices. Nova Labs has also launched Helium Mobile, a cellular service that uses both the Helium 5G network and T-Mobile’s nationwide 5G coverage.

While Helium originally operated on its own blockchain network, it migrated its tokens to the Solana network in April 2023.

Edited by Andrew Hayward