NOVA LABS LIED! FAKED GIANTS LIKE LIME, NESTLE FOR CRYPTO SCAM!

SEC v. Nova Labs, Inc. — U.S. Securities and Exchange Commission Litigation Release No. 26229, dated January 18, 2025.

The SEC charged Nova Labs, Inc. with conducting unregistered offerings of crypto assets as securities and defrauding investors. The company allegedly made false claims about partnerships with major companies like Lime, Nestlé, and Salesforce to boost its unregistered sales of "Hotspots" and a "Discovery Mapping Program." The SEC seeks injunctions, disgorgement, interest, and civil penalties.

In Plain English

Imagine a company selling special devices that promise to earn you digital money. This company, Nova Labs, allegedly told people these devices were a great investment. They also falsely claimed big companies like Nestlé and Lime were using their technology, making it sound more trustworthy. The government stepped in because they say Nova Labs didn't follow the rules for selling investments and lied to people to get their money.

Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.

How the Alleged Scheme Worked

1. Unregistered Crypto Asset Sales Starting in April 2019 and continuing to the present, Nova Labs allegedly offered and sold investment contracts disguised as electronic devices called "Hotspots" and a "Discovery Mapping Program." These offerings were not registered with regulators, violating federal securities laws.
2. Promising Investor Returns Nova Labs promised investors that the "Hotspots" would mine crypto assets (HNT, MOBILE, IOT) and the "Discovery Mapping Program" would distribute MOBILE. Investors were led to believe that Nova Labs' efforts to build and create demand for its wireless network would increase the value of these crypto assets, leading to profits.
3. Fabricated Corporate Partnerships To make its offerings seem more legitimate and valuable, Nova Labs allegedly told potential investors that prominent companies like Nestlé, Salesforce, and Lime were current users of, or relied on, its wireless network.
4. Misleading Investors About Network Usage These claims about major companies using Nova Labs' network were presented as important information for investors deciding to buy "Hotspots" and Nova Labs stock. The company allegedly knew or recklessly disregarded that these companies were not customers or users of their network.
5. Cease-and-Desist Letters Issued When Nestlé and Lime discovered that Nova Labs was publicly touting their purported relationships, both companies issued Nova Labs a cease-and-desist letter, indicating the falsity of Nova Labs' claims.
6. Violating Antifraud Provisions Nova Labs' false and misleading statements about these non-existent business relationships violated the antifraud provisions of the federal securities laws, as alleged in the SEC's complaint.

The Enforcement Action

The SEC charged Nova Labs, Inc. with conducting unregistered offerings of crypto assets as securities and defrauding investors. The SEC's complaint alleges that Nova Labs made unregistered offers and sales of securities when it offered and sold "Hotspots" that mined Nova Labs’ crypto assets and "Discovery Mapping," a program that allows users to exchange their private data for Nova Labs’ crypto assets. The SEC also alleges that Nova Labs made materially false and misleading statements to prospective investors about prominent companies, such as Lime, Nestlé, and Salesforce, purportedly using, being current users of, or relying on the Nova Labs’ wireless network when those companies were not in fact using the network. The SEC’s complaint charges Nova Labs with violating Sections 5(a), 5(c), and 17(a)(2) of the Securities Act of 1933, and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. The SEC seeks permanent and conduct-based injunctions, disgorgement of ill-gotten gains, pre-judgment interest, and civil penalties.

Named in this action: Nova Labs, Inc..

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