US judge dismisses SEC fraud lawsuit against Richard Heart

[polonieth]

A federal judge dismissed on Friday a lawsuit by U.S. securities regulators accusing an online entrepreneur of raising more than $1 billion through unregistered cryptocurrency offerings and defrauding investors out of $12.1 million to buy luxuries including the world's largest black diamond.
U.S. District Judge Carol Bagley Amon in Brooklyn cited a lack of ties between Richard Heart's alleged conduct and the United States in deciding to toss, opens new tab the U.S. Securities and Exchange Commission's 2023 lawsuit against Heart, a U.S. citizen residing in Finland.

The SEC had alleged that Heart, also known as Richard Schueler, touted his Hex token, PulseX asset trading platform and PulseChain asset network on YouTube and other websites as pathways to "grandiose wealth."
The SEC in its lawsuit said Heart knew his often "tongue-in-cheek" disclaimers that his offerings were not securities were false, including when he said that Hex was capable of 38% annual returns and "built to be the highest appreciating asset that has ever existed in the history of man."
He was also accused of spending PulseChain investor funds on McLaren and Ferrari sports cars, four Rolex watches costing $3.02 million, and "The Enigma," a 555-carat black diamond costing 3.16 million British pounds (then $4.28 million) at a Sotheby's auction in February 2022, the SEC said.

But Amon said the online statements at issue were directed to a global audience, not a U.S. one specifically, and that the SEC failed to allege he engaged in transactions with U.S.-based investors through his websites.
To the extent the complaint alleged Heart misappropriated investor funds through deceptive transactions, those actions occurred entirely abroad, the judge wrote.
"The alleged misappropriation occurred through digital wallets and crypto asset platforms, none of which were alleged to have any connection with the United States," Amon wrote.
A spokesperson for Heart said in a statement the judge's ruling "in favor of a cryptocurrency founder and his projects over the SEC brings welcome relief and opportunity to all cryptocurrencies."

The SEC did not respond to a request for comment.

https://www.reuters.com/legal/us-ju...awsuit-against-hex-crypto-founder-2025-03-01/

Big day for crypto this one; unlike many of the cases that the SEC has abandoned, due to Trump's new admin, this one was dismissed and directly questions the SEC’s extraterritorial reach.

I don't think many here predicted this one happening. After the hearing, I felt pretty confident it would be partially dismissed as Hearts lawyers came armed to the teeth with solid arguments, and the Judge gave the SEC a bit of a dressing down. But full dismissal, big news.

 

[polonieth]

For those unaware of what Pulsechain is, it was launched to bring Ethereum gas fees down. If you held ETH before the snapshot on May 10th 2023, you received copies of that, plus any ERC20 you held at the time. So if you had 200,000 DAI, you have 200,000 pDAI, for example.

I'm surprised nobody is talking about this win in court...

 

[wellington]

Read it, still digesting, basically because it was a non-interactive site, no payment processing (fiat) and non-directed marketing -> hard for the SEC to get jurisdiction, wasn't aware he was living in Finland in 2018 though, also this is the civil side, the DOJ highly likely have a criminal case in the works, will have taken a bruise, but the Finish tax indictment was meant to flush him out I suspect, not sure where he is laying up (guessing Russia) but a solid win - 20 days to appeal but looking at the odds less than 20% chance they manage to get one through.