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A US federal court dismissed the SEC’s case against Richard Heart, the founder of HEX, a ruling promising significant implications for the cryptocurrency sector.
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The court’s decision highlights the ongoing debate surrounding regulatory jurisdiction in the rapidly evolving cryptocurrency marketplace.
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In a statement from Heart, he emphasized, “This type of victory over the SEC is quite rare,” underscoring the ruling’s relevance for the industry.
US court dismisses SEC case against HEX’s Richard Heart, validating global marketing strategies and boosting HEX’s price significantly.
Judge Rules Against SEC in Richard Heart Case
On February 28, the US District Court for the Eastern District of New York ruled in favor of Richard Schueler, widely known as Richard Heart, dismissing the SEC’s lawsuit against him.
The agency had accused Heart of conducting an unregistered securities offering, alleging that he raised over $1 billion in cryptocurrency assets.
It also claimed that Heart and his blockchain project, PulseChain, misappropriated at least $12 million for luxury purchases, including high-end cars, watches, and a rare black diamond.
Heart resisted these claims, arguing that the SEC lacked jurisdiction over his activities. He maintained that the regulator failed to prove that his actions specifically targeted US investors or violated domestic securities laws.
US District Judge Carol Bagley Amon sided with Heart, stating that the SEC did not establish a sufficient legal basis for its case.
The judge also found that Heart’s marketing efforts were globally available and not specifically directed at US investors. The SEC had claimed Heart extensively promoted his projects through websites and social media.
However, the court determined that simply providing information online does not constitute sufficient grounds for jurisdiction.
“Heart did not directly message US-based investors or respond to questions through his websites. Rather, Heart disseminated ‘how to’ information, which alone is not sufficient. Accordingly, Heart’s website contacts simply provided globally available information and lack sufficient interactivity to constitute a significant contact,” Judge Amon wrote.
Additionally, the judge ruled that the SEC failed to demonstrate that Heart’s alleged misconduct, including misappropriation of funds and deceptive transactions, took place within the US.
“The alleged misappropriation occurred through digital wallets and crypto asset platforms, none of which were alleged to have any connection with the United States,” the Judge ruled.
Meanwhile, the ruling also determined that even if the SEC had proven jurisdiction, its complaint lacked substantial evidence of domestic securities law violations. As a result, the case was dismissed.
“Even if the SEC had established personal jurisdiction over Heart, the Complaint cannot stand because it fails to adequately plead that either the transactions or conduct at issue were domestic under the federal securities laws,” Judge Amon stated.
HEX and PulseChain Surge Following Legal Victory
Reacting to the court’s decision, Heart described the ruling as a rare victory for the cryptocurrency industry.
He emphasized that HEX, PulseChain, and PulseX should be allowed to operate freely, stating that HEX has functioned without issue for over five years.
“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. Today’s decision in favor of a cryptocurrency founder and his projects over the SEC brings welcome relief and opportunity to all cryptocurrencies,” Heart stated.
Following the decision, the tokens linked to Heart experienced massive price gains.
According to CoinGecko data, HEX gained over 77% in the past 24 hours, trading at $0.003979. Meanwhile, PulseChain rose more than 65% to approximately $0.01575 at press time.
Conclusion
This court ruling represents a significant shift in the regulatory landscape for cryptocurrencies, potentially influencing how companies interact with regulators in the future. With this legal victory, Richard Heart has set a precedent that may embolden other cryptocurrencies to defend their operational models against regulatory scrutiny.
