A U.S. federal judge has dismissed the Securities and Exchange Commission’s (SEC) lawsuit against Richard Heart, the founder of the cryptocurrency HEX. The SEC had accused Heart of raising over $1 billion through unregistered cryptocurrency offerings and misusing $12.1 million for personal purchases, including luxury items and rare collectibles.
Jurisdictional Challenges
The dismissal was based on jurisdictional issues, with the judge ruling that Heart’s activities were not specifically directed at U.S. investors. The court noted that the alleged misappropriation occurred through digital wallets and crypto asset platforms that lacked a concrete connection to the United States.
SEC’s Accusations
The SEC had claimed that Heart promoted HEX, PulseChain, and PulseX with exaggerated promises of wealth, including statements suggesting that HEX could provide 38% annual returns. Additionally, the agency alleged that investor funds were used for extravagant purchases, including high-end sports cars, expensive watches, and unique auctioned items.
Court’s Reasoning
The judge ruled that Heart’s online promotional efforts were global rather than targeted specifically at the U.S. market. Furthermore, the SEC was unable to demonstrate that Heart engaged in financial transactions within the U.S. jurisdiction, weakening the foundation of the case.
Heart’s Response
Following the ruling, Heart’s representatives expressed relief, emphasizing that the decision was a step toward protecting legitimate crypto entrepreneurs from overreach by regulatory agencies. Heart himself acknowledged the challenges of winning a securities-related case against the SEC and welcomed the outcome.
SEC’s Position
The SEC has not publicly commented on the dismissal, leaving uncertainty about whether further legal actions will be pursued.
Implications for Cryptocurrency Regulation
The case highlights the difficulties regulators face in enforcing securities laws within the decentralized crypto industry. As digital assets continue to evolve, this ruling may set a precedent for future cases, influencing how regulators approach enforcement in the space.
