Judges Dismiss SEC Case Against HEX Crypto Founder Richard Heart, Citing Lack of Jurisdiction

A U.S. federal judge has dismissed the Securities and Exchange Commission’s (SEC) case against Richard Heart, the founder of HEX and associated projects PulseChain and PulseX. 

This judge’s dismissal of SEC’s case could prove pivotal for cryptocurrency as it tries to come out of the regulatory hurdles and heavy crypto policies that have been prevailing.

The SEC had accused Heart—whose real name is Richard Schueler—of raising over $1 billion through unregistered cryptocurrency offerings and defrauding investors of approximately $12.1 million. 

According to the complaint, Heart misappropriated funds to purchase luxury items, including expensive sports cars, high-end watches, and a record-setting black diamond.

Ruling And Court’s Reasoning

In her decision, Judge Carol Bagley Amon of the Eastern District of New York ruled that the SEC failed to establish a sufficient link between Heart’s actions and U.S. investors. 

The judge emphasized that Heart’s marketing efforts and online communications were directed toward a global audience rather than specifically targeting U.S. residents. 

“The alleged misappropriation occurred through digital wallets and crypto asset platforms, none of which were alleged to have any connection with the United States,” Judge Amon stated. 

Under U.S. securities law, jurisdiction requires that a defendant’s activities be purposefully directed toward the U.S. market—a criterion the SEC did not meet in this case.

Market Reaction And Industry Implications

Following the ruling, the market reacted positively. Token prices for HEX, PulseChain, and PulseX experienced noticeable gains as investors interpreted the decision as a significant victory for the broader cryptocurrency community. 

Heart celebrated the ruling on social media, stating, “HEX has operated flawlessly for over five years. Today’s decision not only vindicates our projects but also sets an important precedent for the entire crypto industry.” 

The judge’s dismissal of SEC’s case underscores the ongoing debate over regulatory reach and highlights the challenges U.S. authorities face in applying domestic securities laws to globally targeted crypto offerings.

Future Legal Prospects

Although the case was dismissed, the judge allowed the SEC an opportunity to amend its complaint and refile the case within 20 days. 

This leaves open the possibility for further legal action. Meanwhile, Heart continues to face separate legal challenges abroad, including ongoing investigations in Finland related to tax evasion and assault.

As the crypto industry evolves, this judge’s dismissal of SEC’s case may well serve as a precedent for similar cases in the future, potentially reshaping how regulators approach jurisdiction in the digital economy.

Also read: SEC Launches A New Crypto Task Force Website For Crypto Laws.