Nova Labs, the company behind the Helium blockchain network, has reached a $200,000 settlement with the U.S. Securities and Exchange Commission (SEC) to resolve fraud allegations without admitting guilt, according to court documents filed Thursday.

Settlement Highlights

• Nova Labs will pay $200,000 to settle SEC fraud charges without admitting or denying wrongdoing
• The SEC has dropped its critical claims that Helium’s tokens (HNT, MOBILE, and IOT) are securities
• The regulator accused Nova Labs of misrepresenting relationships with Nestle, Salesforce, and Lime to investors

The settlement resolves a January complaint where the SEC alleged Nova Labs misled institutional investors during a 2021-2022 funding round that raised $200 million at a $1 billion valuation.

Misrepresentation Allegations

According to the SEC’s complaint, Nova Labs exaggerated its business relationships with several major corporations. The regulator claimed Nova Labs presented Nestle, Salesforce, and Lime as active customers when their actual interactions were limited and primarily occurred before Helium’s network launch in 2019.

The SEC detailed that Nestle’s involvement was merely a small hardware test in its water delivery business in 2018 – before Nova Labs even entered the crypto space. Similarly, the relationship with scooter company Lime allegedly consisted of just two demonstrations to a pair of Lime employees in early 2019, at least one of whom soon left the company.

Both Nestle and Lime eventually sent cease-and-desist letters to Nova Labs, threatening legal action if the company continued claiming ongoing relationships with them, according to the SEC’s allegations.

Major Win on Securities Classification

Perhaps most significantly for the crypto industry, the SEC agreed to drop its claims that three Helium tokens – HNT, MOBILE, and IOT – were securities. These claims were dismissed with prejudice, preventing the SEC from bringing similar allegations in the future.

Nova Labs celebrated this aspect of the settlement in a Thursday blog post, calling it a “major win for Helium and the People’s Network.”

“With this dismissal, we can now definitively say that all compatible Helium Hotspots and the distribution of HNT, IOT and MOBILE tokens through the Helium Network are not securities,” the blog post stated. “The outcome establishes that selling hardware and distributing tokens for network growth does not automatically make them securities in the eyes of the SEC.”

The company’s blog post did not mention the $200,000 payment or address the investor misrepresentation claims.

When contacted for comment, Nova Labs Chief Legal Officer Sarah Aberg noted that while the settlement agreement prevents the company from either 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.”

The settlement agreement, filed in the Southern District of New York (SDNY), still requires approval from a federal judge before becoming final.