#SEC Sues Nova Labs for Fraud#

The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Nova Labs, Inc. on January 17, 2025, alleging that the company had conducted unregistered offerings and sales of crypto asset securities, and defrauded investors since April 2019, through its sales of “Hotspots” devices and its “Discovery Mapping” program. The SEC alleges that Nova Labs conducted unregistered offers and sales of securities in connection with its offering and sale of electronic devices called “Hotspots” (used to mine Nova Labs' crypto assets) and “Discovery Mapping” (a program that allows users to exchange their private data for Nova Labs’ crypto assets). The SEC is seeking a permanent injunction against Nova Labs, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties. The crux of the lawsuit is Nova Labs' alleged offering of the crypto assets in the “Hotspots” devices and “Discovery Mapping” program as securities, without undertaking the necessary registration procedures, and defrauding investors through false and misleading statements. The SEC's lawsuit will have a significant impact on the future of Nova Labs, and could serve as a cautionary tale for the entire cryptocurrency industry.