- The SEC lawsuit against HEX founder Richard Heart was dismissed due to lack of U.S. jurisdiction over his crypto activities.
- The court ruled that Heart’s alleged fraud happened outside the U.S. and was not directed at U.S. investors.
- The SEC can refile the case by March 20 if it addresses the jurisdictional issues raised by the judge.
A federal judge dismissed the lawsuit filed by the United States Securities and Exchange Commission against Richard Heart. The regulator accused him of raising over $1 billion through unregistered cryptocurrency offerings and defrauding investors of $12.1 million.
Heart, whose real name is Richard Schueler, promoted the Hex (HEX) token, PulseChain (PLS) asset network, and PulseX (PLSX) asset trading platform. The SEC claimed he misled investors by making false claims about potential returns and denying that his offerings were securities.
The SEC alleged that Heart used investor funds for personal luxuries. The purchases included McLaren and Ferrari cars together with four Rolex watches valued at $3.02 million and a 555-carat black diamond at $4.28 million from Sotheby’s auction. The regulator argued that these expenditures supported its claim that he misappropriated funds.
Court Cites Lack of U.S. Jurisdiction
The court ruled that the SEC had failed to demonstrate sufficient proof for U.S. jurisdictional control over Heart’s cryptocurrency operations. The court determined that the fraudulent actions spread across various countries without targeting American investors particularly. Judge Carol Bagley Amon decided that both the digital wallets and crypto platforms had no direct connection to U.S. territory.
The court order stated that the SEC could amend its complaint and refile the case within 20 days, setting a deadline of March 20. The decision leaves room for further legal action if the regulator can address the jurisdictional issues.
Heart Celebrates Legal Victory
Following the ruling, Heart expressed satisfaction with the court’s decision. He emphasized that PLS, PLSX, and HEX are not classified as securities, allowing them to operate freely in the crypto market. He credited recent regulatory clarity for strengthening the digital asset industry.
Ongoing Legal Troubles
Heart remains entangled in legal issues. Finnish authorities arrested him last year on charges of tax fraud and assault but later lost track of him. Interpol issued a Red Notice in December for the same charges.
Authorities seized $2.6 million in abandoned watches, but Heart’s current location remains unknown. Despite this, he remains active on social media, continuing to promote his cryptocurrency projects.
