The U.S. Securities and Exchange Commission (SEC) has voluntarily dropped its case against Helium Foundation and Nova Labs.

The initial case, brought in 2023, accused the Helium project of offering its natively minted token HNT as an unregistered security.

The U.S. Securities and Exchange Commission (SEC) has voluntarily dropped its case against Helium Foundation and Nova Labs.

The agency is no longer pursuing the lawsuit that began in 2023 and accused the Helium project of offering its natively minted token HNT as an unregistered security.

The Background of the Lawsuit

The case was a consequence of an extended campaign to designate various crypto tokens as securities. In its 2023 complaint, the SEC had asserted that Helium had sold and offered HNT tokens to investors without registering them, in contravention of U.S. securities laws.

Helium, which built a decentralized wireless network on blockchain-based infrastructure, had always maintained that its HNT token possessed a utility function within its ecosystem. Helium Foundation and Nova Labs argued that their use-case was founded on users placing hotspots in order to get paid in HNT for providing wireless coverage—a use-case that did not fit the definition of a security.

The agency had sued several startups this year alone, including Blockfolio and Localcoinswap.

Sudden Turn of Events

In an April 10 filing, the SEC formally requested the U.S. District Court of the Southern District of New York to dismiss the case. The filing provided no lengthy explanation but only said that the agency was not going to pursue the case any further at this point.

The abrupt termination caught many within the industry off guard, especially considering the SEC’s still-pending suit against several other crypto startups. While it’s not unusual for regulatory agencies to shift their cases, the radio silence regarding the dismissal has been fueling theories that the SEC is reassessing its approach with Web3 platforms and utility tokens in general.

For Helium, the dismissal is a significant court win. Nova Labs CEO Amir Haleem responded by pledging anew the project’s dedication to decentralization and user-driven networks.

“We wholeheartedly believe in the utility of our token and the transparency of our operations, which were evident throughout this legal process,” said Haleem. “This outcome affirms our path and makes us more confident in continuing to innovate and decentralize the future of networking.”

HNT Price Responds Positively

Announcement of dismissal of the lawsuit had a quick impact on sentiment in the markets. Helium’s HNT token price went up more than 6% in the hours following the announcement, reaching highs not seen since last month. The rally shows renewed confidence by investors not just in Helium but in the regulatory acceptability of similar utility token designs.

To developers and investors, the SEC decision is being read as a potential sign of a loosening of regulatory stranglehold. In recent months, U.S. regulators have been subject to criticism for what some have seen as overreach in their attempts to regulate the emerging blockchain technologies. Critics have argued that the current U.S. securities laws, written almost a century ago, fall short of the complexity of decentralized digital assets.