Key Takeaways
- The court dismissed the SEC’s lawsuit against Richard Heart due to lack of personal jurisdiction.
- The SEC failed to prove that Heart’s crypto transactions qualified as domestic under US securities laws.
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The US District Court for the Eastern District of New York has dismissed the SEC’s case against Hex founder Richard Schueler — who goes by Richard Heart — and his crypto projects Hex, PulseChain, and PulseX.
“I appreciate Judge Amon’s careful ruling which has dismissed all of the SEC’s claims against me. This type of victory over the SEC is quite rare. PulseChain, PulseX and HEX are not securities and should be allowed to flourish. HEX has operated flawlessly for over 5 years,” said Heart in a statement following the court’s ruling.
In July 2023, the SEC filed a complaint against Heart, accusing him of selling unregistered crypto asset securities in violation of federal securities laws. The regulator also alleged the Hex founder misappropriated investor funds for personal luxury purchases, including cars, watches, and diamonds.
Following the SEC’s move, Heart filed a motion to dismiss the case. He argued that the securities watchdog had overstepped its regulatory boundaries and failed to sufficiently prove securities law violations.
In a court’s order dated Feb. 28, the judge granted dismissal based on lack of personal jurisdiction. The court found that Heart’s marketing and sales activities were not specifically directed at the US but were global in nature.
The court also determined that the SEC failed to prove Heart’s crypto transactions qualified as “domestic transactions” under US securities laws.
The ruling noted that post-offer marketing activities, including conferences and social media engagement, were not relevant since no new securities were being sold during that period. The court also found that Heart’s websites and online promotions were not sufficiently interactive to establish jurisdiction.
The SEC’s fraud claims regarding PulseChain misappropriation were dismissed because the alleged fraudulent activity occurred outside the US. The regulator failed to demonstrate that Heart’s transactions happened in the US or that the fraud had a substantial effect in the country.
“Today’s decision in favor of a cryptocurrency founder and his projects over the SEC brings welcome relief and opportunity to all cryptocurrencies. Thank you President Trump for supporting cryptocurrency,” Heart stated.
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