A federal judge dismissed the U.S. Securities and Exchange Commission’s (SEC) lawsuit against HEX founder Richard Heart on February 28, citing insufficient jurisdiction.
Judge Carol Bagley Amon ruled the SEC failed to prove Heart’s crypto projects: HEX, PulseChain, and PulseX targeted U.S. investors specifically. Following this, the court concluded the agency lacked authority to pursue claims of unregistered securities offerings or alleged $12.1 million fraud.
Heart, legally named Richard Schueler, raised over $1 billion through three token offerings between 2019 and 2022. However, the judge emphasised the SEC’s complaint relied on “untargeted, globally available” online statements rather than evidence of deliberate U.S. engagement.
Court Rejects SEC’s Claims of U.S.-Targeted Crypto Sales
Judge Amon clarified that under U.S. law, the SEC must demonstrate intentional targeting of domestic investors. Despite Heart’s U.S. citizenship, his communications were deemed broad and non-specific to American audiences. Furthermore, the tokens were not listed on U.S. exchanges, weakening the SEC’s jurisdictional argument.
“Merely having U.S. participants doesn’t establish jurisdiction,” Amon stated, noting the complaint didn’t prove transactions occurred domestically. Also, the SEC’s fraud allegations, which include Heart’s alleged misuse of funds for luxury purchases, were dismissed due to insufficient ties to U.S. platforms.
Alleged Fraud and Luxury Spending
The SEC accused Heart of misappropriating $12.1 million to buy luxury goods, including a 555-carat black diamond dubbed “The Enigma,” high-end sports cars, and Rolex watches. However, Judge Amon ruled these transactions occurred outside U.S. jurisdiction, using international crypto platforms and wallets.
“Deceptive mixer transactions happened entirely abroad,” Amon wrote, rejecting claims tied to U.S. oversight. But Finnish authorities separately pursued Heart for tax fraud and assault in 2024, seizing $2.6 million in abandoned watches. Despite an Interpol Red Notice, Heart remains active online, promoting his projects from an undisclosed location.
Heart Claims Victory as Crypto Tokens Rally Post-Ruling
Following the dismissal, HEX, PulseChain, and PulseX surged by 78%, 36%, and 67%, respectively. Heart celebrated the rare legal win on social media, declaring, “PulseChain, PulseX, and HEX are not securities and should flourish.” He credited the ruling as a victory for crypto innovation, adding, “HEX has operated flawlessly for five years.”
Nevertheless, the SEC retains until March 20 to amend its complaint. Legal experts suggest the agency might focus on proving U.S. transactional links. “This case underscores the SEC’s jurisdictional challenges in global crypto markets,” said attorney Linda Parker.
Finnish Authorities Pursue Tax Fraud
While Heart evades U.S. securities charges, Finnish prosecutors allege he committed tax fraud and physical assault in 2024. Authorities arrested him briefly in September but lost track of his whereabouts months later. Interpol issued a red notice in December, yet Heart continues posting on X and YouTube, dismissing allegations as “baseless.”
Finnish officials confiscated eight luxury watches tied to Heart, valued at $2.6 million, after he allegedly abandoned them. However, his current location remains unknown, complicating extradition efforts.
SEC Retains Window to Refile
The dismissal highlights growing tensions between regulators and decentralised crypto projects. Judge Amon’s ruling stresses the need for clear evidence of U.S. targeting, a hurdle for the SEC in borderless digital markets.
Meanwhile, Heart’s case reflects broader regulatory struggles to police global crypto activities. “Jurisdiction remains a gray area,” said crypto analyst Mark Thompson. “Projects operating without geographic focus challenge traditional frameworks.”
As the SEC weighs its next steps, the crypto industry watches closely. A refiled complaint could test jurisdictional boundaries, while Heart’s ongoing legal battles abroad add layers of complexity.
Written By Fazal Ul Vahab C H
