A US federal court has dismissed the SEC’s lawsuit against Richard Heart, the founder of HEX, citing jurisdictional overreach. Following the decision, tokens associated with Heart—HEX, PulseChain, and PulseX—have surged in value, with HEX leading the rally with a nearly 80% gain.
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, who is commonly recognized as Richard Heart, dismissing the SEC’s case against him. The regulatory body had accused Heart of executing an unregistered securities offering, alleging that he raised over $1 billion in cryptocurrency assets. The SEC also claimed that Heart and his blockchain initiative, PulseChain, misappropriated at least $12 million for luxury purchases, which included high-end cars, watches, and a rare black diamond. Heart contested these allegations, asserting that the SEC did not have jurisdiction over his activities. He argued that the regulator was unable to prove that his actions specifically targeted US investors or breached domestic securities laws. US District Judge Carol Bagley Amon agreed with Heart, indicating that the SEC failed to provide an adequate legal foundation for its claims. The judge noted that Heart’s marketing efforts were accessible globally and not specifically aimed at US investors. While the SEC argued that Heart heavily promoted his projects through various online platforms, the court determined that merely sharing information online does not establish sufficient grounds for jurisdiction. “Heart did not directly message US-based investors or respond to inquiries 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 did not demonstrate that Heart’s alleged misconduct, including the misappropriation of funds and deceptive transactions, occurred within the United States. “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. Furthermore, the ruling determined that even if the SEC had established jurisdiction, its complaint did not include substantial evidence of violations of domestic securities laws. Consequently, 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
In response to the court’s ruling, Heart hailed the decision as a significant victory for the cryptocurrency sector. He asserted that HEX, PulseChain, and PulseX should be permitted to operate freely, emphasizing that HEX has functioned without issues 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 remarked.
HEX Price Surge After SEC’s Legal Defeat
Following the court’s decision, the tokens associated with Heart saw substantial price increases. According to data from CoinGecko, HEX surged by more than 77% within a 24-hour period, trading at $0.003979. In the same vein, PulseChain experienced a rise of over 65%, reaching approximately $0.01575 at the time of reporting.
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