The U.S. Securities and Exchange Commission (SEC) has shaken the crypto world with two major developments. The agency filed a lawsuit against Digital Currency Group (DCG) and launched an investigation into Helium Network’s creator, Nova Labs, marking a significant regulatory escalation.
SEC Files Lawsuit Against DCG
The SEC has accused Digital Currency Group of misleading investors regarding its exposure to the now-defunct hedge fund Three Arrows Capital (3AC). According to the lawsuit, DCG and its subsidiary Genesis Global Capital failed to disclose the full extent of their financial losses following 3AC’s default on margin calls in June 2022.
As part of a settlement, DCG agreed to pay $38 million, while former Genesis CEO Michael Moro will pay $500,000. Despite this, neither party admitted to or denied the SEC’s findings. Genesis, which suspended withdrawals in late 2022 and declared bankruptcy in January 2023, had more than $10 billion in liabilities and over 100,000 creditors.
The SEC also alleged that Genesis executives directed employees to project confidence in the company’s financial health during the summer of 2022, despite growing financial pressures. Moro was further accused of making misleading public statements, manipulating the market, and misinforming investors.
Helium Network’s Nova Labs Under Investigation
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In a parallel action, the SEC has set its sights on Nova Labs, the creator of the Helium Network. The agency’s filing claims that Nova Labs raised funds from investors through the sale of “Hotspot” devices and the Discovery Mapping Program. These programs promised returns via three tokens: Helium Network Token (HNT), Helium Mobile Token (MOBILE), and Helium IoT Token (IOT).
Following the SEC announcement, HNT saw a 0.23% drop, trading at $5.14 before briefly falling to $4.90. However, other tokens like MOBILE surged, gaining 20% despite the regulatory scrutiny.
Market Impact and Community Reactions
These regulatory actions have had a mixed impact on the crypto market. While the SEC’s lawsuits have raised concerns about increasing regulatory pressure, tokens like MOBILE have demonstrated resilience. The Helium community is closely monitoring the situation, awaiting updates from Nova Labs and the SEC.
As The Bit Journal continues to report on these developments, the growing involvement of regulatory authorities underscores the evolving landscape of the crypto market and the challenges facing decentralized projects.
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