Federal Judge Dismisses SEC Lawsuit Against Richard Heart
A federal judge has dismissed the Securities and Exchange Commission’s (SEC) lawsuit targeting cryptocurrency entrepreneur Richard Heart, concluding that the agency could not establish jurisdiction over him as a U.S. citizen residing in Finland. This ruling represents a significant setback for the SEC, which has been striving to impose regulations on the burgeoning cryptocurrency sector. District Judge Carol Bagley Amon delivered the verdict on Friday, stating that the SEC failed to demonstrate that Heart had sufficient ties to the United States concerning his cryptocurrency initiatives, including Hex, PulseChain, and PulseX. The court’s findings revealed that Heart’s online activities were not aimed specifically at American investors, as they were broadly accessible on a global scale. Judge Amon noted in her ruling, “The relevant online communications described in the Complaint during the offer periods consist of untargeted, globally available information.” She dismissed the SEC’s claim that Heart’s participation in virtual conferences held in the U.S. established jurisdiction.
Allegations Against Heart
The SEC accused Heart of engaging in unregistered cryptocurrency offerings, claiming he raised over $1 billion through his projects, Hex, PulseChain, and PulseX. Furthermore, the agency asserted that he employed deceptive “recycling” transactions to falsely inflate trading volumes and create a misleading sense of demand for Hex tokens. The 2023 complaint also alleged that Heart misappropriated at least $12.1 million from PulseChain investors for lavish personal purchases. These expenditures reportedly included a rare 555-carat black diamond known as “The Enigma,” valued at nearly $4 million, as well as luxury watches and high-performance vehicles such as McLaren and Ferrari sports cars.
Jurisdictional Findings
Despite the gravity of the accusations, Judge Amon determined that the alleged misappropriation of funds took place via digital wallets and cryptocurrency platforms that lacked any connection to the U.S. “To the extent the Complaint shows that Heart misappropriated investor funds through deceptive mixer transactions, those actions occurred entirely outside of the United States,” she stated. The court did not address whether Heart or his ventures conducted sales or offerings that fell under the SEC’s regulatory framework; it exclusively focused on the jurisdictional aspects of the case.
Heart’s Response and Market Reaction
Heart, whose legal name is Richard Schueler, acknowledged the rarity of winning a case against the SEC, especially concerning securities law. “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,” he expressed on social media following the ruling. In the aftermath of the decision, the values of the tokens involved—PulseChain (PLS), PulseX (PLSX), and HEX (HEX)—reportedly surged by approximately 36%, 67%, and 78%, respectively. The SEC has been granted a 20-day period to submit an amended complaint that addresses the jurisdictional issues highlighted in the judge’s ruling, with the deadline set for March 20.
Ongoing Legal Challenges for Heart
While this ruling marks a legal victory for Heart against the SEC, he is not free from other legal troubles. In September 2024, Finnish authorities took Heart into custody following allegations of tax fraud and assault, but they have been unable to locate him since. In December 2024, Interpol issued a red notice concerning these allegations, which acts as a request to law enforcement agencies worldwide to locate and provisionally detain a person pending potential extradition. Finnish police managed to confiscate around $2.6 million worth of luxury watches believed to be owned by Heart, which were seized from a residence he vacated in Espoo. Despite ongoing searches for him, Heart remains active on social media, where he continues to promote his cryptocurrency ventures on platforms like X (formerly Twitter) and maintains a presence on YouTube.
Implications for Cryptocurrency Regulation
This case underscores the difficulties that regulatory agencies face in asserting jurisdiction over cryptocurrency operators who engage in global business conducted through digital channels. The SEC’s capacity to effectively regulate cryptocurrency offerings is called into question when operators are based outside the U.S. The ruling may have broader consequences for how U.S. regulatory bodies approach enforcement actions against international cryptocurrency entrepreneurs, indicating that simply having a global online presence accessible to American investors may not suffice to establish U.S. jurisdiction.
