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This is a segment from the Lightspeed newsletter. To read full editions, <\/em>subscribe<\/em><\/a>.<\/em><\/p>\n On Friday, the SEC filed suit against Nova Labs, the developer behind the Helium Mobile crypto-enabled cell network. The agency charged Nova Labs with fraud and registration violations.<\/p>\n The litigation wound up being the last of Gary Gensler\u2019s four-year tenure as SEC chair, and it was a seemingly poetic way for Wall Street\u2019s top cop to go out<\/a>. The regulator frequently locked horns with the crypto industry, which bristled against his \u201cregulation by enforcement<\/a>\u201d approach. His staff departs with a lawsuit against a company it had been investigating for years \u2014 and which many in crypto think could give the asset class real-world utility<\/a>.<\/p>\n The SEC argued<\/a> that Helium hotspots<\/a> \u2014 which provide wireless connectivity and dole out token rewards \u2014 along with discovery mapping \u2014 where Helium Mobile users share their data with the company in exchange for tokens \u2014 both equate to unregistered securities sales. The agency also accused Nova Labs of fraudulently telling potential investors that Lime, Nestl\u00e9 and Salesforce had used its wireless network.<\/p>\n A Nova Labs executive told me the Gensler-led SEC inquiry had been going on for two years prior to the suit and called the last-day lawsuit \u201cas irresponsible as it is wrong-headed.\u201d<\/p>\n The debate on whether most crypto tokens are securities has been a long-running one in crypto, although it may come to not matter as much: Fox Business reported<\/a> President Trump aims to give the CFTC the regulatory lead on crypto, meaning the SEC won\u2019t have as much say over alleged crypto securities<\/a>.<\/p>\n As for the fraud part of things, Mashable reported<\/a> in mid-2022 that Helium\u2019s website said it had partnered with the scooter app Lime, and Lime said the partnership didn\u2019t exist. The expos\u00e9 led to a bit of egg on the face for Helium, which removed mentions of Lime as well as Salesforce from its website shortly thereafter. The SEC also says Helium falsely told investors that Nestl\u00e9 was involved in the Helium network, whereas actual contact between the two was limited.\u00a0<\/p>\n Nova Labs CEO Amir Haleem wrote on X that none of the SEC\u2019s claims \u201chold any water at all.\u201d Elsewhere, Haleem posted<\/a> a screenshot of a 2020 email from Salesforce, seemingly confirming some sort of partnership between the two.\u00a0<\/p>\n With the SEC expected to take a more crypto-friendly approach under President Trump, the suit may seem unlikely to go anywhere. There\u2019s a catch however: Reuters reported<\/a> Trump\u2019s SEC is expected to freeze crypto litigation that does not involve fraud. Gensler\u2019s SEC may have tried to force a continuation of its suit by charging Nova Labs with fraud.<\/p>\n Now, a potential Paul Atkins-led<\/a> SEC might have to choose between continuing a lawsuit it didn\u2019t start or appearing not to care about fraud.<\/p>\n Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter<\/a>.<\/strong><\/p>\n Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter<\/a>.<\/strong><\/p>\n Get alpha directly in your inbox with the 0xResearch newsletter<\/a> \u2014 market highlights, charts, degen trade ideas, governance updates, and more.<\/strong><\/p>\n
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